Dutch bonus cap reform
20/05/26
The Dutch remuneration landscape for financial institutions will change significantly. On 19 May 2026, the Dutch Senate approved a legislative amendment that materially changes 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 - making it 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 is 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.
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.
Identified Staff
Earlier in the process, on 30 March 2026, the Minister of Finance submitted an explanatory note to the Dutch Senate in which he elaborated on how the concept of Identified Staff should be interpreted in practice.
The explanatory note confirms that the interpretation of Identified Staff should align with the regulatory framework applicable to the relevant financial institution. Where European legislation already prescribes which roles materially affect an institution’s risk profile, such as under the CRD framework for banks and large investment firms, the Solvency II Directive and related regulations for insurers or under other sector‑specific EU remuneration regimes for other financial institutions, that framework remains decisive.
At the same time, institutions for which the concept of identified staff is new are not required to adopt the banking‑specific definition. Instead, they are expected to determine which roles fall within scope based on a proportionate, substantiated and risk‑based assessment considering their risk profile. This provides an important clarification : not all financial institutions are required to apply the extensive CRD Identified Staff selection framework.
The Minister also explicitly confirms that this qualification cannot be fragmented. Individuals cannot partially fall within and partially outside the scope of the bonus cap depending on specific tasks or responsibilities.
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 equalises 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
The reform 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 while 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.
The changes result in further internal differentiation within financial institutions. While the reform introduces increased flexibility for non‑Identified Staff, it simultaneously leads to a more restrictive and tightly defined remuneration framework for Identified Staff. This underscores the need for a robust remuneration architecture, consistent role classification, well-substantiated Identified Staff selection frameworks and transparent governance arrangements to ensure both compliance and effective reward outcomes under the new regime.
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 organisation 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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