Making Dutch Employee Equity Work More Like a US Option Pool

How Dutch BV companies can structure employee participation for founders, employees and international investors

In the United States, employee equity is part of startup infrastructure. In a venture-backed Delaware corporation, an option pool is usually expected. Founders, employees and investors understand the basic framework: option pool, vesting, exercise price, board approval, cap table, valuation, exit and possible liquidity.

In the Netherlands, the position is different. Dutch startups can certainly allow employees to participate in the value they help create, but the legal and tax implementation is less plug-and-play. A Dutch BV may use stock options, options over depositary receipts, direct shares, depositary receipts through a STAK, SARs, phantom equity or cash-settled incentive arrangements. Each structure has different tax, governance, corporate law and exit consequences.

That makes employee equity in the Netherlands more of a structuring exercise than a standardised part of every venture financing.

The practical question is therefore not whether Dutch startups can create employee participation. They can. The better question is how a Dutch BV should be structured so that employee equity becomes more understandable, investable and scalable for founders, employees and international investors.

This article explains what stands in the way, how Dutch employee equity differs from a US-style option pool and how a Dutch BV employee equity plan can be structured in a way that is practical for financing rounds, talent retention and exits.

This article is part of the ViottaLaw series on Dutch VC terms and Dutch BV structures, share options for Dutch startups and scale-ups, Dutch Preference Shares vs US Preferred Stock, Dutch BV governance for US and international investors and setting up in the Netherlands for VC-backed companies.

The goal: employee equity as startup infrastructure

A Dutch startup BV should ideally have a clear employee equity pool from the first serious financing round.

That pool should be approved by the shareholders, usually as a percentage of the fully diluted share capital. The board should be able to make grants within agreed limits. The plan should include vesting, leaver rules, exit treatment, drag-along alignment, tax explanation and cap table treatment.

For employees, the story should be simple.

They receive a right to participate economically in the company. That right vests over time. If the company grows and there is a sale, IPO or other liquidity event, the employee may participate in the value created. The value is uncertain, but the upside is real.

That is what makes US-style employee equity powerful. It is not only about tax. It is also about the clarity of the ownership story.

In the Netherlands, that story is often less clear. Employees may receive a legally correct plan, but one that is difficult to understand. Founders may see the plan as an administrative burden. Investors may focus mainly on dilution. Tax advisers may warn about taxable moments. The notary may need to be involved. The result is that employee equity is often implemented too late, too narrowly or too technically.

Tax is the visible friction point

Tax is the most visible obstacle.

Historically, one of the main issues in the Netherlands was that employees could be taxed when exercising options, even though the shares acquired were still illiquid. That is unattractive for startup employees: tax without cash.

The Dutch regime has improved. Since 1 January 2023, the taxable moment for employee stock options is, in principle, deferred until the shares acquired upon exercise become tradable. That was an important step.

But tradability is still not the same as an actual sale. An employee may still face tax when shares become tradable, even if the employee does not in fact sell the shares. That means the liquidity issue has not disappeared entirely.

Further Dutch tax measures for startups and scale-ups are being discussed. The direction is clear: the Dutch government recognises that employee option plans should become more attractive if the Netherlands wants to compete for startup talent and capital.

But tax alone will not solve the problem. Even a more favourable tax regime does not automatically make employee equity simple, standardised and understandable.

The Dutch BV is flexible, but not automatically plug-and-play

A Dutch BV is legally flexible. It can support different share classes, option rights, STAK structures, contractual incentive arrangements and investor rights.

But real equity participation in a Dutch BV often triggers corporate law mechanics. Articles of association, shareholder resolutions, pre-emption rights, transfer restrictions, notarial deeds, shareholder registers, powers of attorney and the shareholders’ agreement may all become relevant.

In a US venture context, an option grant often feels like a standard board approval and cap table update. In a Dutch BV, actual equity can quickly become a notarial and corporate law project.

That does not make the BV unsuitable. It means that the BV must be made employee-equity-ready in advance.

Startup articles and shareholders’ agreements should anticipate an employee equity pool. Issuance, transfer or certification of equity within that pool should be pre-approved or exempted from certain procedural steps, within clear limits. Otherwise every grant risks becoming a mini-restructuring.

Pre-emption rights and transfer restrictions must be pool-proof

A practical issue is that many Dutch BV documents are not drafted with employee equity in mind.

Issuing shares may trigger pre-emption rights. Transferring shares may trigger transfer restrictions. Certifying shares through a STAK may need to fit with the articles, shareholders’ agreement and future financing documentation.

If these issues are discovered only when options are granted or when a Series A round is being negotiated, they create friction. Founders want speed. Employees want clarity. Investors want a clean cap table. But the company documents may not support quick and repeatable grants.

The solution is an employee equity carve-out.

The articles and shareholders’ agreement should provide that rights may be granted within an approved employee pool under the plan, without reopening the entire shareholder approval process for every individual grant.

Investors can still be protected through limits: maximum pool size, board approval, investor consent for deviations, clear vesting and restrictions on transfer.

The STAK can be useful, but must be explained properly

The STAK is a typical Dutch structure. A foundation holds shares and issues depositary receipts to participants. Employees receive economic rights, while voting rights remain centralised at the STAK level.

This can be very useful in a Dutch BV. It allows employees to participate economically without turning every employee into a direct voting shareholder. It helps keep governance manageable and avoids a fragmented cap table.

But a STAK is often unfamiliar to international investors and difficult for employees to understand.

The structure requires terms of administration, STAK governance, leaver rules, exit treatment and alignment with drag-along rights, tag-along rights, liquidation preferences and shareholders’ agreements.

A startup STAK should therefore not be presented as a Dutch legal curiosity. It should be presented as a practical cap table tool.

A good STAK module should explain the structure simply: the STAK holds the shares, the employee receives depositary receipts or rights linked to them, the employee participates economically, and voting remains centralised. The exit treatment should explain how the employee participates in sale proceeds.

For US and UK investors, there should also be a short explanation showing how the Dutch STAK structure maps to a US-style option pool or employee participation plan.

SARs and phantom equity can be useful, but they are different

SARs and phantom equity are often used because they can be easier to administer. Employees do not receive shares or depositary receipts. Instead, they receive a contractual right to a payment linked to value growth or exit proceeds.

This can work well, especially for broader employee groups, later-stage companies or situations where governance simplicity matters more than actual ownership.

But SARs and phantom equity are not the same as ownership participation.

They often feel closer to a bonus arrangement than to employee ownership. That may be entirely appropriate, but it should be a conscious choice.

For key hires, early employees and people who are expected to build long-term company value, actual or quasi-actual equity may be more powerful. Options over shares or depositary receipts with vesting and clear exit rights can create a stronger ownership narrative.

A mature Dutch startup equity toolkit should therefore distinguish between an ownership track for key contributors and an economic incentive track for broader employee participation.

Valuation is an underestimated issue

In US option plans, valuation is a familiar part of the process. In the Netherlands, there is no equally recognised startup valuation practice for employee equity grants.

That creates questions.

What is the value of the shares at grant? What is the value at exercise? Which value applies when the shares become tradable? What happens when an employee leaves? Is there a discount for illiquidity or minority position? Which value is used for wage tax purposes?

Without a valuation framework, employee equity becomes harder to explain. Employees do not fully understand what they receive. Founders cannot communicate the plan confidently. Investors cannot easily diligence it. Tax advisers want comfort.

The Netherlands does not need to copy the US 409A practice one-to-one. But Dutch startups do need a recognisable valuation file for employee equity: a periodic valuation record aligned with tax review, financing rounds, the cap table and grant practice.

Leaver rules should be simpler

Many Dutch participation plans become unnecessarily complex because of leaver provisions.

Good leaver, bad leaver, early leaver, vested rights, unvested rights, exercise period, repurchase price, nominal value, fair market value: the terminology quickly becomes technical.

For employees, equity works only if the rules are understandable. What happens if I leave? What happens if I am dismissed? What happens if I leave before or after vesting? What happens if the company is sold?

A standard Dutch startup leaver framework should be clearer.

Unvested rights lapse. Vested rights remain exercisable for a limited period or are taken into account on exit. Bad leaver situations receive stricter treatment. Good leavers receive reasonable protection. On exit, the plan should clearly state whether acceleration, cashless exercise or settlement is possible.

The legal drafting may still need nuance, but the employee explanation should fit on two pages in plain language.

Exit treatment must be clear from the start

Employee equity is credible only if employees understand how value can eventually be realised.

In a Dutch BV exit, several layers may interact. There may be a drag-along. There may be a liquidation preference. A STAK may sit between the employee and the shares. Options may need to be exercised. Depositary receipts may need to be treated. A notarial transfer may be required. Sale proceeds may need to be allocated through a waterfall.

If this is not addressed in advance, friction arises precisely when speed matters most.

Every Dutch employee equity plan should therefore include an exit schedule. It should explain what happens to vested rights, unvested rights, cashless exercise, drag-along, share sale, asset sale, STAK depositary receipts, liquidation preference and distribution of sale proceeds.

A good plan prevents employees from discovering only at exit that their rights work differently from what they expected.

What a US-style Dutch BV option pool could look like

A Dutch BV does not need to become a Delaware corporation to make employee equity work better. But it should be structured as an equity-plan-ready company.

A practical model could work as follows.

The shareholders approve an employee equity pool on a fully diluted basis, for example up to 10 to 15 percent. The board is authorised to make grants within that pool under a standard plan. Investors receive consent rights for deviations from key terms or grants above agreed thresholds.

The plan includes four-year vesting with a one-year cliff, unless a different commercial arrangement is more appropriate. Leaver rules are clear and consistent. On exit, cashless exercise or settlement should be possible where appropriate, so employees do not need to fund exercise before sale proceeds are available.

For broad-based employee participation, a STAK can be used as a cap table wrapper. For key hires, options over shares or depositary receipts may be more appropriate. SARs or phantom equity can be used where economic incentive is more important than ownership culture.

The structure should also include an employee explanation and an investor memo. The employee explanation describes in plain language what the employee receives. The investor memo explains how the Dutch BV structure compares with a US-style option pool.

What is really standing in the way?

The main obstacle is not one single rule. It is the combination.

Tax still sits within the wage tax logic. That makes it harder to frame employee equity as entrepreneurial participation. The taxable moment has improved, but it does not always perfectly align with actual liquidity. The tax burden can be high, and further startup-specific improvements are still developing.

Corporate law is flexible, but not automatically plug-and-play. Articles, pre-emption rights, transfer restrictions, shareholders’ agreements and notarial implementation must all be aligned.

Operationally, there is insufficient standardisation. There is no universally recognised Dutch startup option pool package that founders, employees, investors, notaries and tax advisers immediately understand.

Culturally, employee equity in the Netherlands is still too often treated as compensation rather than ownership infrastructure. The Dutch system protects employees well as employees, but does not automatically help them participate as co-owners in enterprise value.

That is the paradox. A country with strong egalitarian instincts should be a natural home for broader employee participation in company value. But the institutional reflex is more often wage protection, pension, employment law, social security and tax redistribution than startup upside.

Conclusion

The Netherlands does not need to copy the US model one-to-one. A Dutch BV is not a Delaware corporation, and it does not need to be.

But Dutch startups do need better employee equity infrastructure. Taxation should better align with actual liquidity. BV documentation should be option-pool-proof from the first financing round. STAK structures, options, SARs and phantom equity should be standardised and explained more clearly. Exit treatment should be defined in advance. Employees should understand what they receive. Investors should be able to diligence the plan without cap table uncertainty.

The solution is therefore not only lower tax. The solution is a standard Dutch BV employee equity framework: simple enough for founders, understandable for employees, acceptable for investors and executable in a financing round or exit.

Employee equity in the Netherlands should feel less like a tax exception and more like startup infrastructure.

FAQ

Why is employee equity in the Netherlands less plug-and-play than in the United States?

Because Dutch employee equity combines tax, corporate law, governance, notarial, valuation and cultural friction. Tax is important, but the lack of standardisation is just as important.

Can a Dutch BV have a US-style option pool?

Functionally, yes. A Dutch BV can create an approved employee equity pool, but the articles, shareholders’ agreement, vesting rules, leaver provisions, exit treatment and tax analysis must be aligned.

What is the main Dutch tax issue?

The main issue is taxation without actual liquidity. The 2023 regime improved the timing of taxation, but tradability is not always the same as a sale or cash proceeds.

Why is a STAK useful in employee equity plans?

A STAK can give employees economic participation without making them direct voting shareholders. This helps keep governance and the cap table manageable.

Are SARs and phantom equity good alternatives?

They can be useful where economic incentive matters more than actual ownership. But they usually create less ownership culture than options, shares or depositary receipts.

What should a Dutch startup option pool include?

A good Dutch startup option pool should include pool size, eligibility, vesting, cliff, leaver rules, exercise mechanics, exit treatment, drag-along alignment, tax explanation, investor consent mechanics and a clear employee explanation.

About Dirk de Waard

Dirk de Waard is a Dutch corporate, M&A and venture capital lawyer and partner at Venture Lawyers in Amsterdam. He advises founders, startups, scale-ups, US and UK investors and management teams on Dutch venture capital, employee equity, stock options, STAK structures, shareholder arrangements, governance and Dutch BV implementation.

Structuring an employee equity pool for a Dutch BV?

Employee equity can be a powerful tool for talent, growth and investor readiness. But options, depositary receipts, STAK structures, SARs, phantom equity, vesting, leaver rules, taxation and cap table impact must be aligned with Dutch BV governance and future financing or exit mechanics.

Dirk de Waard advises founders, investors and international counsel on employee equity and startup financing involving Dutch BVs. Contact Dirk at dirk.dewaard@viottalaw.com to structure a Dutch BV employee equity pool that is practical, investable and understandable.