Management equity that gives a leveraged return and is meant partly as a reward for work is a lucrative interest under Article 3.92b of the Dutch Income Tax Act. Held directly, it is taxed in box 1 at up to 49.5% on dividends and at exit. Held through a personal holding with at least 5%, it is taxed in box 2 at 24.5% and 31% in 2026, if the holding pays out 95% of the benefits in the same calendar year. From 2028 a multiplier of 36/31 raises the effective top rate on that route to 36%. Pay market value at entry, document it, and set up the holding before signing.
Sweet equity is taxed as pay for work, unless it sits in your holding
In a Dutch buy-out the fund puts most of its money into preference shares or shareholder loans with a fixed return, and the managers buy ordinary shares beside it. The ordinary shares take everything above the fixed return, so a EUR 100,000 ticket can be worth EUR 500,000 at exit. That leverage is the point of management equity, and what the tax rules look at.
The lucrative interest regime (lucratief belang) in Article 3.92b of the Income Tax Act 2001 (Wet IB 2001) treats that return as income from work when it is meant, even partly, as a reward. The income leaves box 2 or box 3, where an ordinary investor would be taxed, and lands in box 1 as result from other activities, at up to 49.5% in 2026.
There is one exit, and nearly every Dutch management plan uses it: hold the interest through a personal holding B.V. in which the manager has a substantial interest, and have the holding pay out at least 95% of the benefits in the same calendar year. The benefit is then taxed in box 2, at 24.5% on the first EUR 68,843 and 31% above in 2026. From 2028 an enacted multiplier lifts the effective rate on this route to 36%. For employee options and receipts, see employee stock options in the Netherlands and the STAK.
Box 1, up to 49.5%
Result from other activities, at exit and on each dividend.
Box 2: 24.5% / 31%
If 95% is paid out in the same calendar year.
Pay market value
A discount is wage, taxed at entry.
Multiplier 36/31
Effective top rate on the holding route 36%.
The two tests: an instrument with leverage, and a reward motive
Article 3.92b(1) taxes as work the holding, directly or indirectly, of shares, receivables or rights whose benefits are presumably intended at least partly as a reward for work done by the taxpayer or a related person. Holdings of the partner and relatives in the direct line count too (paragraph 6).
| Instrument | Lucrative interest when | Wet IB 2001 |
|---|---|---|
| Shares of a subordinated class (sweet equity) | The class is less than 10% of the company's total issued share capital | Art. 3.92b(2) |
| Preference shares | The preference is at least 15% dividend a year | Art. 3.92b(2) |
| Receivables, such as loan notes | The return depends to a material degree on management or shareholder goals: profit, turnover, a sale | Art. 3.92b(3) |
| Other rights: ratchets, options on such shares, depositary receipts | Economically similar to the above, or value depending materially on those goals | Art. 3.92b(4) |
| Loans that contribute to the reward | Counted as capital, and as a class of their own, in the 10% test | Art. 3.92b(5) |
The 10% test is a leverage test. Below a tenth of the capital, each euro of sweet equity sits on at least nine euros of senior money. In a knowledge group position of 3 August 2026 (KG:059:2026:3), the tax authority took the view that a cumulative preferred return added to the preference shares counts as paid-up capital for the ratio, while growth in the value of the ordinary shares does not.
Loans. The Supreme Court held on 14 April 2023 (ECLI:NL:HR:2023:557), on a CFO's certificates, that a shareholder loan counts in the 10% ratio only if it is informal capital. The legislator answered with paragraph 5, announced with effect from 26 June 2023: a loan that contributes to the reward counts as capital and as a separate class.
The reward motive. Paying full market value does not take an instrument out of the regime; the rules tax the leverage given to people because they work. Leaver clauses, vesting, a ratchet tied to the fund's return, drag and tag rights and a planned exit all point to a reward, and courts let the inspector prove it easily. In February 2026 (KG:059:2026:1) the tax authority's knowledge group accepted the opposite for a regular employee participation: no leaver clauses, no management targets, no exit plan, no lucrative interest.
A fund buys a Dutch company with EUR 20 million of equity: EUR 18.5 million in preference shares with an 8% cumulative coupon, and EUR 1.5 million in ordinary shares, of which the fund takes EUR 1.2 million and the management team EUR 300,000. The finance director invests EUR 100,000 for a third of the management slice. The ordinary class is 7.5% of the issued capital, below 10%, and the shares come with leaver clauses: a lucrative interest. Preference shares at 8% are not lucrative in anyone's hands: the preference is below 15%.
Law and practice: Wet IB 2001, Article 3.92b(1) to (6); Hoge Raad 14 April 2023, ECLI:NL:HR:2023:557; Belastingdienst knowledge group positions KG:059:2026:1 (5 February 2026) and KG:059:2026:3 (3 August 2026); Kamerstukken II 2007/08, 31459, nr. 3, p. 10.
Pay market value, or pay wage tax on the discount
The lucrative interest regime taxes the return. The acquisition is a separate question. A discount to market value is wage, taxed at up to 49.5% on acquisition. Article 3.95b(1) then sets the starting value of the interest at the amount paid plus the amount taxed, so the discount is not taxed twice.
Market value is not simply the fund's price per share. In a case decided by the Court of Appeal of Arnhem-Leeuwarden on 17 April 2018 (ECLI:NL:GHARL:2018:3620), managers paid EUR 10 per certificate of an ordinary share, the same price the fund paid. Ordinary capital was EUR 100,000 against EUR 11.2 million of preference shares. The court held the certificates were worth more than EUR 10, taking expected results into account; the Supreme Court dismissed the appeal without substantive reasons on 29 May 2020 (ECLI:NL:HR:2020:970). The fund's price for the ordinaries is evidence, not proof: the fund holds the senior strip and does not care what it pays for them.
The protection is a valuation at entry that models the waterfall, the coupon and the exit horizon, and values any ratchet: a right under paragraph 4 with some value at grant.
Leaver clauses. A good leaver usually sells at market value, a bad leaver at the lower of cost and market value. For a manager holding directly, a forced sale below value produces a negative result in box 1, deductible against salary. Through a holding, a negative benefit from the indirectly held interest does not count in box 1 (Article 3.95b(4)); the loss stays in the holding and in box 2.
Options and Article 10a of the Wage Tax Act. An option on sweet equity is wage, taxed since 1 January 2023 when the shares acquired become tradable, or at exercise if the employee elects. Once exercised, the shares can be a lucrative interest, with the taxed option benefit in their starting value. Our note on Dutch stock options tracks it, and phantom and growth shares covers the alternatives.
- Valuation report dated at entry. Waterfall, coupon, leaver terms and ratchet included.
- Same price for the same class. Managers and fund pay the same per ordinary share, at least.
- Leaver prices written down. Good leaver at market value, bad leaver at the lower of cost and market value.
- Holding in place before signing. A later transfer is valued at market value and taxed in box 1.
Law and practice: Wage Tax Act 1964 (Wet LB 1964), Articles 10 and 10a; Wet IB 2001, Article 3.95b(1) and (4); Gerechtshof Arnhem-Leeuwarden 17 April 2018, ECLI:NL:GHARL:2018:3620; Hoge Raad 29 May 2020, ECLI:NL:HR:2020:970 (Article 81 RO).
Box 1: every dividend and the exit gain at progressive rates
A directly held lucrative interest produces result from other activities in box 1. The 2026 rates for taxpayers below state pension age are 35.75% up to EUR 38,883, 37.56% up to EUR 78,426 and 49.5% above. A manager whose salary already exceeds EUR 78,426 pays 49.5% on every euro of the lucrative interest.
| Rate | 2026 (in force) | 2027 (proposed) |
|---|---|---|
| Box 1 top rate | 49.5% above EUR 78,426 | 49.5% above EUR 80,578 |
| Box 2 first bracket | 24.5% up to EUR 68,843 | 24.5% up to about EUR 69,700 (forecast) |
| Box 2 above that | 31% | 29.2% for 2027 to 2030 (cabinet letter of 29 September 2026) |
| Holding route multiplier | None | None; 36/31 from 1 January 2028 (enacted) |
Timing. The result follows the profit rules: dividends and interest are taxed in the year they are received, and the gain when the interest is disposed of, at exit or in a secondary sale. A ratchet is simply part of the exit benefit. Whether an accrued but unpaid preferred return is taxed earlier depends on the profit rules; model it.
Switching later is a taxable event. When the interest moves from direct to indirect holding, or back, it is valued at market value immediately before the move (Article 3.95b(3)). Set the structure up before signing.
The finance director of example (a) holds her EUR 100,000 of ordinary shares personally. Five years later the fund sells and her shares fetch EUR 500,000. The gain of EUR 400,000 is result from other activities. The tax is EUR 400,000 × 49.5% = EUR 198,000. She keeps EUR 302,000 of the proceeds, her EUR 100,000 back and a net gain of EUR 202,000.
Law and practice: Wet IB 2001, Articles 2.10 (box 1 rates), 3.90 to 3.92b (result from other activities) and 3.95b(3); Belastingdienst, 'Voorlopige aanslag 2026: gebruikte tarieven'; Tax Plan 2027 and the cabinet's additional proposals of 29 September 2026, which still need parliamentary approval.
Box 2 through a personal holding: the 95% election
Article 3.95b(5) lets the taxpayer elect that benefits from an indirectly held lucrative interest do not count as result from other activities, provided that in the same calendar year at least 95% of those benefits is received as income from a substantial interest. The holding owns the sweet equity and pays every benefit straight through as a dividend.
- Substantial interest in the holding. At least 5%; in practice the manager owns 100% of the holding.
- 95% in the same calendar year. The benefit is computed as if held directly. An exit closing on 20 December needs a dividend resolution and payment before 31 December; January is too late.
- Participation exemption at the holding. A personal holding often owns far less than 5% of the target group. Without the exemption (Article 13 of the Corporate Income Tax Act 1969) the gain bears corporate tax of 19% and 25.8% first, a combined burden of up to 48.8%, and the holding may not have the cash to pay out 95% of the pre-tax benefit.
- Dividend tax on the way up. Without an exemption, 15% Dutch dividend tax is withheld on dividends to the holding; check whether and where it is credited.
- No late move into box 2. Under Article 3.95b(6) the election does not apply, to the extent of the value above the amount paid, where the interest was first held through an entity in which the manager had no substantial interest.
A share exchange between holdings that only changes the legal form gives no benefit (KG:059:2024:1).
The finance director holds through her own B.V., which gets the participation exemption through the management vehicle. The B.V. receives EUR 500,000 in 2026 and pays out the full EUR 400,000 benefit before year end. Box 2: EUR 68,843 × 24.5% plus EUR 331,157 × 31%, or EUR 119,525, an effective 29.9%. She keeps a net gain of EUR 280,475, EUR 78,475 more than in box 1. Paying out only 95% cuts this year's tax to EUR 113,325; the EUR 20,000 left is taxed later, about EUR 6,200. Without the participation exemption the B.V. would first pay EUR 89,600 corporate tax, keep EUR 310,400 and be unable to pay out EUR 380,000 from the proceeds: the election would fail.
| Exit year (gain EUR 400,000) | Box 1, direct | Holding route | Difference |
|---|---|---|---|
| 2026 | EUR 198,000 | EUR 119,525 (29.9%) | EUR 78,475 |
| 2027, if the 29.2% top rate is adopted | EUR 198,000 | EUR 113,564 (28.4%) | EUR 84,436 |
| 2028 onwards, multiplier 36/31, 2026 brackets | EUR 198,000 | EUR 139,525 (34.9%) | EUR 58,475 |
The 2028 multiplier. The Tax Plan 2026 multiplies box 2 income from an indirectly held lucrative interest by A/B, where A is the box 3 rate (36%) and B the top box 2 rate (31%): EUR 100,000 becomes EUR 116,129, and the effective rates become 28.45% and 36%. The undistributed 5% is not multiplied. An amendment moved the start to 1 January 2028, to be weighed with the new box 3 system; there is no grandfathering. The formula lands the top rate at the box 3 rate, so a temporary 29.2% box 2 rate would not lower it.
Law and practice: Wet IB 2001, Article 3.95b(2) to (6), Articles 2.12 and 4.12 (box 2); Corporate Income Tax Act 1969, Article 13; Belastingplan 2026 (Kamerstukken 36 812), explanatory memorandum on the base broadening for lucrative interests, and the amendment deferring it to 1 January 2028; knowledge group positions KG:059:2024:1 and KG:003:2023:6.
Non-resident managers, treaties and emigration
Non-residents. Article 7.2(2)(c) of the Income Tax Act taxes non-residents on the result from other activities in the Netherlands, and paragraph 3 extends it to holding shares, receivables or rights under Article 3.92b where the benefits are presumably a reward for work in the Netherlands. A non-resident with a substantial interest in a company established in the Netherlands, such as a Dutch personal holding, is taxed in box 2 under Article 7.5.
A foreign holding does not work for a partly non-resident taxpayer. The Court of Appeal of Amsterdam held on 3 July 2025 (ECLI:NL:GHAMS:2025:1746) that an expatriate who opted for partial non-resident status and held through a foreign company could not use the 95% election, because the box 2 income from that foreign holding was not taxable in the Netherlands; the benefit stayed in box 1.
Which treaty article? The Decree on lucrative interests in international situations (Stcrt. 2021, 46689) takes the view that a directly held interest falls under the employment or directors article (Articles 15 and 16 of the OECD model), apportioned by working days, while an interest held through a holding under the election falls under the dividend and capital gains articles (Articles 10 and 13). The courts do not fully agree. The District Court of Zeeland-West-Brabant (ECLI:NL:RBZWB:2024:1503) held that a German resident's dividend of EUR 1.9 million from a directly held certificate fell under the dividend article, leaving only the 15% Dutch dividend tax, and that his EUR 5.2 million sale gain was taxable only in Germany. The Court of Appeal of 's-Hertogenbosch upheld that on 28 January 2026; whether the State Secretary appeals is open.
Emigration. Emigration is a deemed disposal of the holding shares, secured by a conservatory assessment. For emigrations after 15 September 2015 there is no remission after ten years; the assessment becomes payable on dividends or a sale. The decree contains an approval so that the gap between the box 2 acquisition price and the lucrative interest book value does not push the benefit back into box 1. See moving with stock options in the Benelux.
In year three the finance director moves to Antwerp and keeps working for the Dutch company. Her B.V. holds the sweet equity, now worth EUR 300,000. The Netherlands issues a conservatory assessment on her holding shares. At exit the B.V. pays out the benefit as before; the Netherlands taxes the dividend from the Dutch B.V. within its box 2 claim and the treaty limits, and Belgium taxes the same dividend as income of a resident. Relief for the Dutch tax is limited, so the combined burden has to be modelled before the move. Held directly, the Dutch box 1 claim on the gain would turn on the disputed treaty article.
Law and practice: Wet IB 2001, Articles 2.6, 4.16, 7.2(2)(c) and (3), and 7.5; Besluit lucratief belang in internationale situaties, Stcrt. 2021, 46689; Gerechtshof Amsterdam 3 July 2025, ECLI:NL:GHAMS:2025:1746; Rechtbank Zeeland-West-Brabant, ECLI:NL:RBZWB:2024:1503, upheld by Gerechtshof 's-Hertogenbosch on 28 January 2026 (KPMG Meijburg, February 2026); Belastingdienst, 'Conserverende aanslag bij emigratie'.
Box 1 or the holding route: your numbers
Enter the amount you invest at market value, the exit multiple and the years to exit. The calculator applies box 1 at the top rate and box 2 per year with the election, including the 2028 multiplier for exits from 2028. It assumes the shares were bought at market value and that you meet the holding conditions you select.
Lucrative interest: box 1 or holding route?
Enter your ticket, the expected exit and any yearly income on the instrument. You see the Dutch income tax if you hold the interest directly (box 1) and through a personal holding B.V. (box 2 with the 95% distribution election), the difference, and the conditions to check.
Box 1 on sweet equity held directly, on dividends and at exit.
Paid out by the holding in the same calendar year for box 2.
Multiplier on the holding route from 1 January 2028.
Market value, a valuation report and the holding in place before signing.
Dutch lucrative interest: frequent questions
What is a lucrative interest in Dutch tax law?
Shares, receivables or other rights that give a disproportionate return and are presumably meant, at least in part, as a reward for work. Article 3.92b of the Income Tax Act 2001 lists them: a subordinated share class below 10% of issued capital, preference shares with a preference of at least 15% a year, receivables whose return depends materially on profit, turnover or an exit, and economically similar rights such as ratchets.
Does paying market value for sweet equity avoid the regime?
No. Paying market value avoids wage tax on a discount at entry, but the lucrative interest regime taxes the leveraged return itself. It applies when the instrument meets the statutory tests and the reward motive is present, whatever the price paid.
How is a lucrative interest taxed in 2026?
Held directly, as result from other activities in box 1: 35.75% up to EUR 38,883, 37.56% up to EUR 78,426 and 49.5% above. Held through a personal holding in which the manager has at least 5%, the manager can elect box 2 if at least 95% of the benefits is paid out in the same calendar year: 24.5% up to EUR 68,843 and 31% above.
What changes for the holding route in 2028?
The Tax Plan 2026 introduced a multiplier of 36/31 on box 2 income from an indirectly held lucrative interest. An amendment moved its start to 1 January 2028. The effective burden then rises to 28.45% on the first bracket and 36% above, with no grandfathering for existing plans.
Is a lucrative interest taxed when I leave the Netherlands?
Shares in your Dutch personal holding receive a conservatory assessment on emigration, as for any substantial interest. A directly held interest stays taxable in the Netherlands as far as it rewards Dutch work, under Article 7.2 of the Income Tax Act 2001, but courts have held that treaty dividend and capital gains articles can override that.
Can I move my directly held interest into a holding later?
Yes, but the switch is valued at market value immediately before the transfer, so the growth to that date is taxed in box 1. The holding should be in place before the shares are acquired.