Phantom shares and SARs cost cash and are wage in all three countries, but deductible. Share-settled plans cost no cash and, in the Netherlands, give no deduction. Belgium taxes real options lightly at grant; Luxembourg exempts gains on shares bought at value within limits; the Netherlands often taxes management equity as a lucrative interest. A STAK, Belgian foundation or Luxembourg fiduciary or SCSp keeps the votes with the founders.
Five ways to share the upside, and the one question that sorts them
Every equity incentive answers one question: does the employee get a share, a right to a share, or a right to money measured by shares? Voting, dilution, cash cost, accounting, the company's deduction and, above all, whether the employee pays wage tax at up to half the gain or capital gains tax at a fraction of it, all follow.
The Benelux uses five designs. Stock options give a right to buy shares later at today's price. Phantom shares and stock appreciation rights pay cash equal to the value, or the growth in value, of notional shares. Growth shares, also called hurdle shares, are real shares that participate only in value above a threshold. Restricted shares and RSUs deliver real shares, now under restrictions or later on vesting. Depositary receipts put the economic interest in the hands of employees while a foundation, the Dutch STAK, or its Belgian or Luxembourg counterpart, holds the shares and the votes.
No design is best in the abstract. Dutch rules punish designs that work in Luxembourg, the Belgian lump sum rewards options that are costly elsewhere, and a company without cash cannot run a phantom plan. Our separate notes cover the Dutch lucrative interest rules, the Luxembourg management incentive plan and Belgian stock options for executives in depth.
Right to buy
Dilutive only on exercise; tax timing differs by country.
Cash, no shares
No dilution, full wage tax, real cash cost.
Shares above a hurdle
Capital gain if bought at value; Dutch lucrative risk.
Value without votes
One shareholder on the cap table.
What the employee owns, what it controls and what it costs the company
Tax and accounting follow the legal position. An option holder has a contractual right and, until exercise, no vote, dividend or statutory information right. A phantom holder is a creditor with a contingent cash claim. A growth share holder is a shareholder from day one, with votes unless the class is non-voting and a say in class resolutions; restricted shares are the same once issued, while an RSU gives nothing before delivery. A receipt holder has a claim on the foundation for the economics of one share; the foundation votes.
| Design | Employee owns | Votes and information | Dilution | Cash cost for the company |
|---|---|---|---|---|
| Stock options | Right to buy shares at a fixed price | None before exercise | On exercise, fully diluted from grant | None if new shares are issued; the employee pays the exercise price |
| Phantom shares, SARs | Cash claim measured by share value or growth | None | None | Full payout, plus employer social security |
| Growth (hurdle) shares | Real shares in a class above a hurdle | Shareholder rights unless the class is non-voting | Only of value above the hurdle | None; the employee pays a low subscription price |
| Restricted shares, RSUs | Shares now (restricted) or on vesting (RSU) | Full once issued, unless non-voting | On issue or delivery | None, unless the company buys shares to deliver |
| Depositary receipts via STAK or foundation | Receipts mirroring the economics of shares | Foundation votes; receipt holders as the terms allow | As for the underlying instrument | Set-up and administration only |
Dilution is not free because no cash leaves: investors price it into the round. Phantom plans look cheap until the exit, when the payout comes out of the sale proceeds.
Law and practice: Dutch Civil Code, Articles 2:227 and 2:228(5); Luxembourg Law of 10 August 1915; Belgian Code of Companies and Associations; Regulation (EU) 2017/1129, Article 1(4)(i) (prospectus exemption for employee offers).
IFRS 2, local GAAP and whether the company can deduct the cost
IFRS 2. An equity-settled plan, such as options or RSUs delivered in new shares, is measured at grant-date fair value and expensed over the vesting period; later price moves are ignored and only the number expected to vest is trued up. A cash-settled plan, such as phantom shares or SARs,is a liability, remeasured at fair value at every reporting date until paid; the total expense equals the cash paid, so a rising valuation flows straight through profit.
Local GAAP. Dutch GAAP follows the same split in RJ 275. Luxembourg and Belgian GAAP have no equivalent standard: in practice a private company provides for a cash-settled plan when the payout becomes probable and records an equity-settled plan only as a capital increase on exercise. An option plan can thus show no charge in statutory accounts while an IFRS-reporting investor books one.
| Question | Netherlands | Luxembourg | Belgium |
|---|---|---|---|
| Phantom or SAR payout deductible? | Yes, as wages | Yes, general rule for business expenses | Yes, as remuneration reported on form 281.10 |
| Options or shares settled in own new shares | Not deductible: Art. 10(1)(j) Corporate Income Tax Act | No expense arises for tax | No expense arises for tax |
| Company buys shares to deliver | Not deductible: same rule | Deductible where the company bears a real cost | Generally deductible as a remuneration cost if reported |
| Employer social security | Deductible; premiums stop at the maximum premium wage | Deductible; employer contributions within the ceiling | Deductible; about 25% to 27% on cash and on shares taxed at value |
| Special charges | None | None | 7.5% contribution on lump-sum benefits above 20% of pay, not deductible |
The Dutch bar covers granting shares and options over own or related company shares, and their buyout. On 9 October 2026 the Supreme Court held a cash bonus paid for giving up conditional rights, before the conditions were met, deductible; on 6 October 2026 the tax authorities' knowledge group confirmed that wage tax the employer bears on share awards stays deductible. The asymmetry: a Dutch phantom plan costs cash but is deductible at 25.8%; an option plan costs no cash and gives no deduction.
Law and practice: IFRS 2, paragraphs 10 to 20 and 30 to 33; RJ 275; Wet Vpb 1969, Article 10(1)(j); Hoge Raad 9 October 2026, ECLI:NL:HR:2026:1631; Kennisgroep position of 6 October 2026; L.I.R., Article 45; Belgian ITC 1992, Articles 49 and 57; Law of 17 December 2025.
When the employee pays, at what rate, and where wage tax turns into a capital gain
Netherlands. Options are wage in box 1, up to 49.5%, when the shares become tradable or, by election, at exercise. Restricted shares and RSUs are wage when unconditional; phantom payouts when paid. Shares or receipts bought at market value leave wage tax: growth sits in box 3, or box 2 at 24.5% and 31% for 5% or more. The exception is the lucrative interest: shares, receipts or receivables obtained for work that carry a leveraged return, such as a thin share class or preference shares yielding 15% or more, are taxed in box 1. Held through a personal holding of at least 5% that passes on 95% of the income within the year, they fall in box 2; from 1 January 2028 that income is multiplied by 36/31, a top burden of 36%. Management growth shares are the textbook case. A bill with the 2027 tax plan would tax options of RVO-recognised start-ups only on sale, on 65% of the gain, excluding lucrative interests.
Luxembourg. Non-transferable options are employment income at exercise, up to 45.78%; free shares and RSUs a benefit in kind on delivery; phantom payouts salary. Shares bought at market value, growth shares included, give a gain exempt after six months if the holder has not exceeded 10% in the past five years; above 10%, half the global rate applies. A sweet equity return unrelated to the price paid can be challenged under the anti-abuse rule. Bill 8782, filed on 1 July 2026 and not adopted, would add a lock-up discount and tax options of young innovative companies only on sale at a quarter of the global rate, about 11.45% at the top.
Belgium. Real options under the Law of 26 March 1999 are taxed at grant, the 60th day after a written offer, on 18% of the share value plus 1% per year of term beyond five, halved if five conditions are met, including no exercise before the end of the third calendar year after the offer. Exercise is tax-free, and under the capital gains tax from 1 January 2026 the acquisition value is the value at exercise, so only later growth is taxed, at 10% above EUR 10,000. The regime covers only rights to acquire shares: SARs and phantom shares are salary, with social security of 13.07% for the employee and roughly 25% for the employer. Free and restricted shares are taxed at value on acquisition, with a 20/120 discount in practice for a lock-up of two years. On 29 June 2026 the Court of Cassation held that a retention purpose does not take RSUs outside social security.
| Design | Netherlands | Luxembourg | Belgium |
|---|---|---|---|
| Stock options | Wage when tradable, up to 49.5%; 2027 bill: 65% at sale | Wage at exercise, up to 45.78%; bill 8782 for start-ups | Lump sum at grant (9% to 18% of value); growth after exercise 10% |
| Phantom shares, SARs | Wage when paid, up to 49.5% | Salary when paid, up to 45.78% | Salary when paid, up to 50% plus surcharge and social security |
| Growth shares at market value | Box 3 or 2, but usually a lucrative interest: box 1 or 36% from 2028 | Exempt after 6 months if 10% or less; anti-abuse test | 10% on gains above EUR 10,000; 33% if abnormal |
| Restricted shares, RSUs | Wage when unconditional | Benefit in kind on delivery | Benefit at value on acquisition; lock-up discount |
| Receipts bought at value | Box 3 unless lucrative interest | As the underlying shares | As the underlying shares, if certification is transparent |
A company worth EUR 10 million grants upside on 1%, worth EUR 100,000. It sells after five years for EUR 50 million: the growth is EUR 400,000. Netherlands, options: wage at exit, about EUR 198,000 at the top rate, no company deduction. Netherlands, cash SAR: the same tax, but the company pays EUR 400,000 and deducts it at 25.8%, saving EUR 103,200. Luxembourg, growth shares bought at value, under 10%: exempt, subject to the anti-abuse test; a non-transferable option exercised at exit would cost about EUR 183,000. Belgium, options meeting the halving conditions, ten-year term: 11.5% of EUR 100,000, so EUR 11,500 taxed at grant, about EUR 5,750 at 50%; exercise and sale on closing give no taxable gain.
Law and practice: Wet LB 1964, Article 10a; Wet IB 2001, Articles 3.92b and 3.95a to 3.95g; Tax Plan 2026 (Senate, 16 December 2025; 36/31 from 2028); start-up bill, Article 10b Wet LB; L.I.R., Articles 95, 99bis, 100 and 131; bill 8782; Law of 26 March 1999, Articles 41 et seq.; Belgian capital gains tax from 1 January 2026; Cass. 29 June 2026, S.24.0021.N.
How a foundation keeps the cap table clean in the three countries
The Dutch STAK. A stichting administratiekantoor holds the shares and issues one depositary receipt per share. The administration conditions govern who may hold receipts, leaver transfers, the duty to follow a drag-along and conversion, which employee plans normally exclude. The B.V.'s articles decide whether receipt holders get meeting rights; in employee plans they usually do not. Since 2021 no board member can outvote all others together. For tax, receipts are the shares they represent. Options are often granted over receipts, combining the Dutch option rules with a clean cap table. See our note on the Dutch stichting and STAK.
Investors like it because the cap table shows one employee shareholder instead of forty, every round and drag deals with one counterparty, leaver transfers move receipts in a register rather than shares by notarial deed, and the board votes with the founders. The flex B.V. alternative, non-voting shares, keeps the votes but puts every employee on the register.
Belgium. A private foundation under Book 11 of the Code of Companies and Associations can certify shares. Under the Law of 15 July 1998 certification is tax transparent if income reaches holders within 15 days. A Dutch STAK over a Belgian company lacks that rule, so Belgian companies use their own private foundation.
Luxembourg. There is no private foundation. A fiduciary under the Law of 27 July 2003 can hold shares in its own name for managers, or a special limited partnership (SCSp) under the Law of 10 August 1915 can pool them as limited partners, with a general partner controlled by the founders or sponsor voting. The SCSp is tax transparent. The carried interest regime covers fund managers, not portfolio company managers.
Law and practice: Dutch Civil Code, Article 2:227 and Book 2, Title 6; WBTR (1 July 2021); Wtt 2018 exemptions; Belgian CSA, Book 11; Law of 15 July 1998, Article 13; Luxembourg Law of 27 July 2003; Law of 10 August 1915, Articles 320-1 et seq.
Vesting, leavers, drag and tag, valuation, and what investors expect
Vesting. Four years with a one-year cliff is the venture default; family companies often prefer one vesting date tied to a sale. In Belgium the halving conditions already impose a three-year wait, so vesting and exercise windows must be drafted together.
Leavers. A good leaver (death, disability, dismissal without cause) keeps vested rights or sells at market value; a bad leaver (early resignation, cause, breach of covenants) loses unvested rights and sells at the lower of cost and value. For shares and receipts this needs a call option in the articles, shareholders' agreement or administration conditions; for options and phantom units the plan suffices. A vague definition of cause invites litigation at the worst moment.
Drag and tag. Investors require that employee holders are dragged into an approved sale. Direct shareholders must each sign or give a power of attorney; a STAK or SCSp signs once.
Valuation. Every design but the phantom plan needs a value at grant. In Belgium the issuer fixes the value of unlisted shares with the statutory auditor's concurring opinion, not below book value. In the Netherlands the inspector tests the economic value; a preference share round price overstates ordinary shares, so a documented discount is normal. Growth shares are the most sensitive: the hurdle must sit at a defensible current value.
Investors in a round expect a pool, commonly 10% to 15% fully diluted at Series A, created pre-money so that it dilutes existing holders; a STAK or equivalent; leaver and drag terms binding every holder; no employee vetoes; and any phantom plan capped and borne as a transaction cost.
| Criterion | Options | Phantom, SARs | Growth shares | Restricted, RSUs | STAK receipts |
|---|---|---|---|---|---|
| Votes stay with founders | Yes | Yes | Only if non-voting | Only if non-voting | Yes |
| Cash cost for company | None | High | None | None | Low |
| Dilution | Yes | None | Above hurdle only | Yes | As underlying |
| Staff tax, NL | Wage; 2027 bill | Wage | Lucrative risk | Wage | Box 3 if not lucrative |
| Staff tax, LU | Wage at exercise | Wage | Exempt within limits | Benefit in kind | As underlying |
| Staff tax, BE | Low lump sum | Salary and social security | 10% capital gain | Benefit at value | As underlying |
| Company deduction | No (NL); none arises (LU, BE) | Yes | None arises | NL no | None arises |
| Complexity | Medium | Low | High | Medium | Medium to high |
| Best for | Start-ups, scale-ups, Belgium | Mature companies with cash | Few senior managers, LU and BE | Mature or listed groups | Many holders, NL |
Law and practice: Belgian Law of 26 March 1999, Article 43 (valuation); bill 8782; market practice; see raising venture capital through a Dutch B.V. or Luxembourg company.
A Dutch scale-up, a Luxembourg family company and a Belgian services firm
A B.V. with 35 staff is negotiating a EUR 12 million Series A. The lead wants a 12% pool, fully diluted and pre-money. The fit: a STAK holding the pool, options over receipts, four-year vesting with a cliff, leaver terms in the administration conditions. Employees pay wage tax only when receipts become tradable, normally at exit. The company applies to RVO for recognition so that options can move to the 65% regime if the 2027 bill passes; its transitional rule covers options granted from 17 April 2025 if the request is made by the end of 2027. Senior hires who invest buy receipts at value, after a lucrative interest review.
A family S.A. worth EUR 20 million wants to bind its CFO and operations director for ten years without sharing votes. Growth shares: a non-voting class taking 5% each of value above EUR 20 million, subscribed at an independent valuation, held through a fiduciary. At EUR 32 million in seven years, each stake is worth EUR 600,000; under 10% and held over six months, the gain is exempt, subject to the anti-abuse test. Phantom shares would cost EUR 1.2 million in deductible cash and leave each manager about EUR 325,000 after tax at 45.78%. The family chose growth shares, with calls at cost for bad leavers.
A Belgian SRL worth EUR 8 million expects a sale within 18 months. Options cannot meet the three-year halving condition, so the 18% lump sum applies: options over 3% (EUR 240,000) give a benefit of EUR 43,200, about EUR 21,600 of tax at 50%, paid even if the sale fails. At a EUR 12 million price the shares are worth EUR 360,000; exercise and sale on closing give no taxable gain. A cash bonus of the same EUR 120,000 would be salary: after 13.07% social security and top-rate tax the staff keep less than half, and the employer adds about a quarter. Check the 7.5% contribution before granting.
Where tax law rewards real equity, as Belgium does for options and Luxembourg for shares bought at value, use it. In the Netherlands use options and a STAK for the many and plan the box 2 route for the few. Use phantom plans when votes and the register must stay untouched and cash exists.
Law and practice: Our figures from sections 03 to 05; surcharges excluded unless stated. Start-up bill, Article VIII (transition) and Article 10ba Wet LB.
Rank the five designs for your company
The checker scores each design against your answers using the rules above, with the main tax point and the documents to prepare.
Which equity plan fits?
Seven questions about the company and what the plan must do. You get the five designs ranked with the reasons, the main tax point for the country you chose and the documents to prepare.
Phantom plans cost cash and are wage everywhere.
Real options under the 1999 law are taxed lightly at grant.
Management equity is often a lucrative interest.
One shareholder on the cap table, votes with the board.
Equity incentive design in the Benelux: frequent questions
Are phantom shares taxed as a capital gain anywhere in the Benelux?
No. Cash-settled phantom shares and SARs are remuneration in all three countries, taxed when paid at up to 49.5% (NL), 45.78% (LU) or 50% plus surcharge (BE), with social security. The company deducts the payout.
Does the Belgian 1999 option regime apply to stock appreciation rights?
No. The Law of 26 March 1999 covers rights to acquire shares. A cash-only right falls outside the lump sum and is salary when paid. A plan letting the company choose cash or shares needs careful drafting.
Can a Dutch company deduct the cost of employee options?
Not when it settles in shares: Article 10(1)(j) of the Corporate Income Tax Act 1969 bars it. Phantom payouts are deductible wages, and on 9 October 2026 the Supreme Court allowed a cash buyout of conditional rights whose conditions were unmet.
What does Luxembourg bill 8782 change for equity plans?
It would tax transferable options at grant and others at exercise, with a lock-up discount of 5% a year up to 20%, and tax options of young innovative companies only on sale at a quarter of the global rate. Phantom options stay employment income. Filed on 1 July 2026, meant for 2027, not adopted.
Do investors object to phantom plans?
Rarely on principle. They object to unfunded payouts that rank ahead of them. Term sheets usually want the payout capped, triggered by a sale and borne by all shareholders pro rata as a transaction cost.