Relaxation Of Dutch Bonus Cap In Financial Sector

Financial undertakings in the Netherlands are currently subject to one of the strictest bonus caps in Europe. A maximum variable remuneration of 20% of the fixed salary applies to all employees of all financial undertakings, with only a few limited exceptions. This stands in sharp contrast to the broader European Union framework, where variable remuneration can go up to 100% of fixed pay (or even 200% subject to strict conditions) and applies only to staff who significantly influence the risk profile of banks and large investment firms.

Background

Financial undertakings in the Netherlands are currently subject to one of the strictest bonus caps in Europe. A maximum variable remuneration of 20% of the fixed salary applies to all employees of all financial undertakings, with only a few limited exceptions. This stands in sharp contrast to the broader European Union framework, where variable remuneration can go up to 100% of fixed pay (or even 200% subject to strict conditions) and applies only to staff who significantly influence the risk profile of banks and large investment firms.

In 2024, an evaluation examined the impact of the bonus cap on the Dutch business climate. The findings made clear that the strict 20% cap on variable pay makes it difficult for financial institutions to attract and retain talent. As a result, the remuneration rules constrain the sector's competitiveness, which in turn negatively impacts the Netherlands' overall business climate. The strict remuneration rules also appear to have been a relevant factor in discouraging financial institutions from establishing in the Netherlands following Brexit.

A particularly pressing issue concerns specialist staff, such as IT professionals, for whom the current bonus rules can be especially constraining. Such specialised personnel is key for the security and innovative capacity of the financial sector.

The amendment seeks to bring the scope of the Dutch bonus cap closer to European standards. The key changes of the amendment are outlined below.

Key amendments

Narrowed scope of the bonus cap

The main change is the limitation of the application of the 20% bonus cap. Instead of application to all staff working under the responsibility of a financial undertaking, the cap will be limited to those individuals who significantly influence the institution's risk profile (identified staff). This includes executives, staff with managerial responsibility for control functions or essential business units, and highly paid individuals.

The bonus cap will no longer apply to all other staff. Nevertheless, since the bonus cap would still apply to identified staff, the intended safeguard against excessive risk-taking and pressure on customer interests will remain in place.

Other important changes

Aligned with the narrowed scope of the bonus cap, the amendment also limits the applicability of several other bonus rules (currently applicable to all staff). With the amendment, the following requirements will apply only to individuals who significantly influence the institution's risk profile:

1. the requirement that variable pay should be based on at least 50% non-financial criteria;
2. certain restrictions on granting retention bonuses. This means that for non-identified staff, amongst other things, prior regulatory approval for granting retention bonuses will no longer be required;
3. the obligation for annual disclosure of variable remuneration in the board report; and
4. the 5-year retention period for financial instruments awarded as part of fixed remuneration.

Next steps

A majority of the Dutch House of Representatives voted in favour of the amendment on 27 January 2026. The amendment is part of a broader legislative package, which also needs to be approved by the Dutch Senate. It is currently unknown when the changes are intended to become effective. We closely monitor any developments and publish updates once available.

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