Update on Dutch Bonus Cap Reform
30/01/26
Significant developments are underway in the Dutch remuneration landscape for financial institutions. On 27 January 2026, the Dutch House of Representatives approved a legislative amendment that materially relaxes the longstanding strict Dutch bonus cap regime as included in the Dutch Financial Supervision Act (Wet op het Financieel Toezicht) (FMSA). The reform aligns Dutch rules more closely with the EU Capital Requirements Directive framework (CRD) and responds to industry concerns about competitiveness and talent attraction and retention.
What Is Changing?
Narrowing the Scope of the Dutch Bonus Cap
The current Dutch regime applies a strict 20% variable-to-fixed remuneration cap to all individuals working under the responsibility of a Dutch financial undertaking with only a few exceptions - one of the most restrictive frameworks in the EU. Under the approved amendment, the 20% cap will only remain applicable to persons whose activities materially affect the risk profile of the financial institution (also referred to as “Identified Staff”). This includes executives/C-suite, staff who manage control functions or key business units, and individuals with high compensation.
All other staff will no longer be subject to the 20% bonus cap. This represents a fundamental shift toward an approach that is more in line with broader EU practice.
Other Material Changes for Non-Identified Staff
- the “Collective Labor Agreement (‘CLA’)-exception” to the Dutch Bonus Cap – where, in exceptional cases, up to 100% variable remuneration is permissible if the average variable-to-fixed ratio of all (non-CLA) personnel in the Netherlands does not exceed 100% - will only be relevant for Identified Staff which will have a massive impact on how this exemption must be applied: the relevant population will be significantly reduced as it will include Identified Staff only most likely resulting in less flexibility for above 20% variable pay for individuals within such group; and
- the (i) requirement to have 50% non-financial performance criteria for variable remuneration, (ii) disclosure obligation on total annual variable remuneration paid, (iii) restrictions on retention bonuses and (iv) obligation to have a five-year holding period for shares or related financial instruments paid as fixed remuneration will all be removed for non-Identified Staff.
Why the Change?
Addressing Competitiveness and Talent Constraints
Government and industry evaluations have highlighted that the 20% bonus cap has hindered the ability of Dutch financial institutions to attract and retain talent, particularly in specialised areas such as technology and cybersecurity. The cap has also been perceived as a factor deterring financial institutions from establishing operations in the Netherlands.
Better Alignment with EU Standards
The reform equalizes the playing field for Dutch financial institutions relative to EU peers, where higher variable remuneration ratios are standard and targeted toward risk-taking staff only.
Compliance Implications for Financial Institutions
While the relaxation reduces constraints for large staff populations, it also introduces new compliance considerations, including:
- Need to classify staff into identified vs. non-identified categories which will be new for many financial institutions;
- Ensuring alignment with CRD technical standards and Dutch supervisory expectations and having a proper Identified Staff-framework;
- Necessity to review and refresh remuneration policies in line with the remuneration philosophy and relevant governance processes for higher variable pay ratios;
- Adjustments to retention bonus governance and disclosure practices; and
- Accounting and tax consequences if in-flight awards or fixed remuneration in shares arrangements are changed.
Reward Considerations for Financial Institutions
It also introduces new reward strategy opportunities triggering the following considerations:
- Formulate a new reward strategy considering the possible higher fixed versus variable ratios;
- Determine impact on remuneration funding processes and costs;
- Consider impact on EU Pay Transparency compliance where arbitrariness must be avoided and a restructuring of the job architecture and remuneration framework may be needed;
- Engaging with shareholders and other stakeholders if higher bonus caps are proposed;
- A potential desire to lower fixed pay and increase variable pay opportunities taking into account existing employment agreements and employment law whilst adhering to the requirements under the EU Pay Transparency Directive;
- Counter requests for higher variable pay if an increase is not aligned with the company’s business and reward strategy; and
- How to deal with annual variable pay disclosure requirements now that this is limited to only a small group of Identified Staff resulting in more visibility.
What does this mean for your organisation?
The proposal to amend the FMSA is part of a wider bill which still needs to be approved by the Dutch Senate. Currently it is not yet clear when the proposed changes will become effective but it is recommended to start preparations at short notice.
We recommend taking concrete next steps, including assessing your current reward structures and practices, anticipating employee (representative bodies) expectations around increased variable pay, evaluating potential implications for Identified Staff and other staff variable pay levels / differentials and identify the most impactful opportunities for your organisation, to ensure your organization is well-prepared for the post-“bonus cap reform” era.
PwC's Executive Reward team can help you with specialist reward and regulatory advice.
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