Prinsjesdag 2026: what changes to employment law can you expect?

Prinsjesdag 2026: what changes to employment law can you expect?

On Prinsjesdag (15 September 2026), the coalition parties’ agreement on the national budget was officially announced. These plans may have an impact on employers. The budget is still subject to the support of opposition parties, as the Netherlands has a minority government. The plans that are relevant to you as an employer are briefly explained in this article. We have explained the postponement of the abolition of the compensation scheme in a separate article (see abolition-of-the-transition-allowance-compensation-scheme/).

Abolition of the tax-free staff discount

From 2027, the government intends to abolish the tax-free discount on the employer’s own products. This is the discount that employers are permitted to offer their staff tax-free. Currently, employers may offer a maximum annual staff discount of €500 on their own products. The rule is that a maximum discount of 20 per cent may be granted on any single occasion.

Employers will still be able to offer their staff discounts through the Work-Related Expenses Scheme (WKR). Under the WKR, the employer can determine for themselves what is made available to the employee on a tax-free basis. The amount that may be spent tax-free is known as the ‘discretionary allowance’. This allowance is set anew each year and applies for that year. For 2026, the free space is set at 2.00% of taxable wages up to and including €400,000. The free space above this amount is set at 1.18%. From 1 January 2027, the percentage up to and including €400,000 will rise to 2.16%.

As a result of this change, employers may need to reallocate the tax-free allowance. Employers will still be able to spend more than the tax-free allowance, in which case they will have to pay tax on the excess. The change will reduce the administrative burden, as employers will no longer need to keep track of separate maximum amounts relating to the tax-free staff discount.

Zero-hours contracts no longer permitted

The Act on Greater Security for Flexible Workers will come into force on 1 January 2028. This means that, in future, employees on zero-hours contracts must be offered a permanent contract. On-call contracts will be replaced by contracts guaranteeing a minimum number of hours for which the employee is paid and scheduled to work. These contracts will specify a minimum and maximum number of hours, with the difference between the two not exceeding 30 per cent. Employees may refuse a request from their employer to work more hours than the maximum. If an employee consistently works more hours, they must be offered a ‘​​ ’ contract with a higher number of hours.

The law does, however, provide for an exception for part-time jobs held by people with another main occupation, such as students and employees who have reached retirement age.

Travel allowance

The tax-free travel allowance has been increased from €0.23 to €0.25 per kilometre. This change applies retrospectively from 1 January 2026. Employers may use this amount to provide a tax-free allowance for business travel and commuting. This scheme was enshrined in law on Prinsjesdag, providing employers with greater clarity in this area.

Expat scheme reduced to 27%

Under the expat scheme, employers may, without further proof, provide certain employees with a tax-free allowance of up to 30 per cent of their salary, including the allowance, to cover extraterritorial costs. These include, for example, removal costs or a higher cost of living. From 1 January 2027, this allowance will be reduced to 27 per cent. In addition, the income threshold will also rise: to €50,436 instead of €46,107.

Tax on share options for start-ups and scale-ups to fall

The Tax Incentives for Start-ups and Scale-ups Act is expected to come into force on 1 January 2027. This will make it easier to reward employees with share options. It encourages employees to share in the company’s financial growth. Employees will pay less tax on share options. Furthermore, tax will not be payable until employees sell the shares acquired through their share option rights.

To make use of this scheme, your company must be recognised as a start-up or scale-up. The Netherlands Enterprise Agency (RVO) has set out specific conditions for this.

Employment tax credit

From 1 January 2027, the benefit will no longer be taken into account for the purpose of the employed person’s tax credit if the employer combines it with the employee’s wages. As a result, the employee will receive a lower net salary. If the employee is entitled to the income-related combination allowance, this change may also affect that. This is because the benefit will no longer be counted as income from work. For the employer, this means that payroll administration will need to be adjusted. In addition, employees must be informed. In practice, this will not lead to higher costs or contributions for the employer.

Pension capping threshold remains unchanged

The pension cap has been in place since 2015 and represents the maximum income on which tax-efficient pension accrual is permitted. This cap is indexed annually to keep pace with wage developments. In 2026, the cap will apply to an annual income of €137,800. On Prinsjesdag, the government proposed freezing this cap until 2032. As a result of this measure, salary increases may cause more employees to exceed this cap.

Company cars

The ‘youngtimer scheme’ will be amended with effect from 1 January 2027. Under this scheme, older cars (youngtimers) are subject to a 35 per cent additional tax liability based on their market value. For cars that do not qualify as youngtimers, this percentage ranges between 22 per cent and 25 per cent. The scheme is being phased out gradually. In 2026, ‘youngtimers’ will be cars aged 16 years or older; in 2027, this will rise to 17 years; and from 2028, it will be 20 years. If a car no longer falls under the scheme, this will result in a higher additional tax liability.

From 1 January 2027, employers will also be required to pay a final levy on passenger cars that do not qualify for the full emissions-based tax relief. The levy amounts to 12 per cent of the car’s tax value and applies to cars made available to an employee for the first time on or after 1 January 2027. This amount cannot be recovered from the employee.

What does this mean for you as an employer?

For you as an employer, the plans will mainly entail administrative work. Payroll records may need to be updated in light of the travel allowance, the expat scheme and the employed person’s tax credit. Furthermore, preparations can already be made for the abolition of zero-hours contracts. Employers who provide company cars would be well advised to assess the options available to them in relation to the new regulations.