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Financial Participation

The introduction of the ‘Vermeend/Vreugendenhil’ Act in 1994 led to an improvement in the legal framework supporting employee financial participation and created tax incentives encouraging employers to introduce such schemes and employees to participate.





The promotion of workers’ financial participation by the Dutch legislator is based primarily on a save-as-you-earn scheme (‘Spaarloonregeling’), which provides for tax concessions for employees purchasing shares in their company.



A key aspect of the 1994 law is a save-as-you-earn model that, alongside bonus savings schemes, is one of the most important savings systems used by companies. The two savings schemes have tax incentives and can be implemented at the same time, whereby savings can be converted into shares.1

The ‘Spaarloonregeling’ is a form of capital-forming saving. If the savings are invested in employee share ownership there are tax benefits up to a maximum investment of 1,226 euros in the form of a tax allowance. A retention period of four years must be observed, during which the shares purchased with savings may not be sold. The legal basis for promoting participation schemes was created with the introduction of the ‘Vermeend/Vreugendenhil’ law.2

The Act of 1994 provides for the parallel use of save-as-you-earn and bonus savings schemes and enables the conversion of savings into shares. But there is no direct link between amounts saved and a company’s performance or profit.



The government raised the tax threshold and reduced the retention period in 1994 for the purpose of promoting the expansion of profit-sharing schemes. The contribution of participating employers must be 20%. In addition companies can offer employees share options instead of cash payments. The same tax incentives apply to share options (which can be part of a savings plan) as save-as-you-earn schemes. The Act stipulates that the option value is set at ‘x%’ of share value, ranging from 4% to 50% depending on when the option is exercised and the intrinsic value of the option. All profits resulting from the exercising of options are transferred to a special savings account and invested for a minimum period of 4 years. Proceeds are tax free up to a limit set annually be the government. This measure is combined with tax concessions for employees receiving share options as part of save-as-you-earn schemes.



Another change concerns employer contributions. Before 1996 employers had to contribute 10% to save-as-you-earn schemes. This contribution was reduced to 0% if the savings amount consists of shares in either the employing company or an affiliated company.3 New income tax legislation was introduced on 1 January 2001: a 30% tax rate is applicable, as long as the employee share in the company is under 5%.4

Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.