Dutch Carried Interest Rules Under Review: What Expats and Investors Should Know
The Dutch Ministry of Finance is considering major changes to how carried interest is taxed. These proposals could significantly impact private equity professionals, international investors, and expats with employee shareholdings
What’s Changing?
On 5 March, the Dutch government launched a public consultation on alternatives to the lucratief belang regime — the Dutch version of carried interest taxation.
This regime was originally introduced to prevent excessive tax advantages in private equity. But in practice, it now affects a much broader group, including startup employees, management teams, and international entrepreneurs.
Two new options are currently being explored:
- Full taxation under Box 1 (wage tax) — up to 49.5%
- A higher Box 2 rate — somewhere between 31% and 49.5%
Why Is This Important?
The current lucratief belang regime is widely seen as complex and unpredictable. Expats, investors, and companies face practical issues such as:
- Unclear scope: Who exactly is affected?
- Valuation delays and administrative burdens
- Risk of double taxation
- Lack of distinction between labour income and return on capital
As a result, normal equity incentives and business succession structures are often caught by rules that were meant to target only aggressive tax planning in private equity.
International Comparison: Are Dutch Rules Out of Line?
Here’s how the (simplified) effective tax rates on carried interest compare internationally:
US: 23.8%
UK: 32%
Germany: 28.5%
France: 34%
Spain: 27%
Belgium: 30% (expected)
𝑁𝐵: 𝑇ℎ𝑒𝑠𝑒 𝑟𝑎𝑡𝑒𝑠 𝑎𝑟𝑒 𝑠𝑖𝑚𝑝𝑙𝑖𝑓𝑖𝑒𝑑 𝑎𝑛𝑑 𝑑𝑜 𝑛𝑜𝑡 𝑐𝑜𝑛𝑠𝑖𝑑𝑒𝑟 𝑣𝑎𝑟𝑖𝑜𝑢𝑠 𝑙𝑜𝑐𝑎𝑙 𝑟𝑢𝑙𝑒𝑠 𝑎𝑛𝑑 𝑐𝑜𝑛𝑑𝑖𝑡𝑖𝑜𝑛𝑠 𝑡ℎ𝑎𝑡 𝑡𝑦𝑝𝑖𝑐𝑎𝑙𝑙𝑦 𝑎𝑝𝑝𝑙𝑦.
Even under current rules, the Netherlands is already on the high end. The proposed changes could make it one of the least attractive jurisdictions in Europe for equity-based compensation and long-term investment.
What Kind of Reform Is Needed?
A fair and effective carried interest regime should:
- Be clear and predictable
- Distinguish between entrepreneurial risk and regular income
- Avoid unintended side effects on standard business structures
- Stay aligned with international practice
Without such balance, the Netherlands risks discouraging innovation, investment, and international talent.
What’s Next?
The public consultation closes today, but the conversation is just beginning. These changes — if implemented — could have far-reaching effects on how equity incentives are taxed in the Netherlands.
If you’re an expat, investor, or company affected by Dutch tax rules, now is the time to:
- Reassess your current structures
- Plan ahead for possible changes
- Seek professional advice
Let’s Talk
Curious how the proposed reforms might affect your carried interest or equity-based compensation? Our team advises expats and cross-border investors on how to stay compliant — and competitive.
Contact us via our website to discuss your situation in confidence.