Updated: October 2026. Rules marked "Netherlands" apply to Dutch companies and their employees. The mechanics of options and SARs are the same in most countries, but the tax treatment is not.
With options on shares, an employee gets the right to buy shares later at a price you fix today. With a SAR (stock appreciation right), the employee only receives the increase in value of those shares in cash and never becomes an owner. Both reward the growth of your company. They differ in what the employee ends up holding, when tax is due and what the setup costs you.
This article looks at the choice from the side of a Dutch private company (a BV). For a broader comparison that also covers listed companies, read stock options vs stock appreciation rights.
How do options on shares work?
An option is an agreement: after a set period (the vesting period), the employee may buy a number of shares at a fixed exercise price. You usually set that price at the value of the company on the day you grant the option. If the value rises, the employee buys the shares for less than they are worth at that point. If the value falls, the employee lets the option lapse and loses nothing.
Netherlands: smaller Dutch companies almost always grant options on depositary receipts (certificaten) rather than on shares. The shares sit in a foundation, the STAK (stichting administratiekantoor), which issues depositary receipts to your team. The employee gets the economic interest, and the voting rights stay with the board of the foundation.
Netherlands: the benefit an employee gets from an option is wage. The taxable amount is the value of the shares the employee receives minus what they pay for them. Since 2023 that tax is due only when the shares become tradable. The employee can also choose in writing to be taxed at exercise (article 10a, Dutch Wage Tax Act 1964). Nothing is taxed at grant.
How does a SAR work?
A SAR is a contract between the company and the employee. You agree that after a number of years, the employee receives the increase in value of a set number of shares in cash. No shares are issued, no notary is involved and the employee pays nothing in. It is a private agreement that you sign directly with the employee.
Netherlands: tax is due only at payout. The payout counts as wage: the company withholds wage tax and the employee pays income tax in box 1, just as on a bonus. The top box 1 rate is 49.50% in 2026 (Belastingdienst). For the company the payout is a wage cost, which as a rule is deductible from profit (Dutch law firms Kienhuis Legal and Blenheim describe it this way).
Quintus Willemse, CEO of Share Council, said on the Equidam podcast that a SAR is "nothing else than a bonus calculated in a very nice way, which carries the highest taxes on the gains".
Worked example: a €40,000 increase in value
Take a Dutch BV that is worth €2,000,000 today. An employee gets rights over 1% of the shares, currently worth €20,000. Four years later the company is worth €6,000,000, so that 1% is worth €60,000. The increase in value is €40,000. To keep it simple we use the Dutch top rate of 49.50%, which in 2026 applies to taxable income above €78,426 (Belastingdienst). Someone who earns less falls partly in the 37.56% bracket and pays a little less.
| SAR | Option, current Dutch rules | Option, 2027 bill (start-up with RVO decision) |
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| What the employee puts in | €0 | €20,000 exercise price | €20,000 exercise price |
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| What they get | €40,000 in cash | 1% of the shares, worth €60,000 | 1% of the shares, worth €60,000 |
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| When it is taxed | At payout | When the shares become tradable, or at exercise if the employee chooses | When the shares are sold |
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| Taxed as wage | €40,000 | €40,000 | 65% of €40,000 = €26,000 |
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| Tax at 49.50% | €19,800 | €19,800 | €12,870 |
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| Left after payout, or after selling for €60,000 | €20,200 | €20,200 (€60,000 minus €20,000 minus €19,800) | €27,130 (€60,000 minus €20,000 minus €12,870) |
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Under the current rules, an option holder pays the same tax on the same €40,000 as a SAR holder. Granting options early does not save tax: the tax is charged on the difference between the share value and the exercise price at the taxable moment, whenever you granted the option. An early grant is fairer, because your first people buy in at today's low value. Where the two differ is what the employee holds afterwards. After a SAR the employee has cash in the bank. After an option they are a co-owner and share in all the growth that follows. With a SAR the company pays out the €40,000 itself, while with an option the employee puts €20,000 in.
Options and SARs side by side
| Options (on depositary receipts) | SAR |
|---|
| How it works | A right to buy depositary receipts for shares at a fixed exercise price after vesting. The employee puts money in and becomes a co-owner. | A right to a cash payment equal to the increase in value of a number of shares. The employee puts nothing in; the company pays out. |
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| When it is taxed | Netherlands: the benefit is wage, taxed in box 1 when the shares become tradable, or at exercise if the employee chooses. If the 2027 bill passes: at start-ups and scale-ups with an RVO decision, only at sale and on 65% of the benefit. | Netherlands: the payout is wage, taxed in box 1. Nothing is taxed at grant. |
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| Setup cost | At Share Council: Co-Ownership Starter, €2,490 for the first year (including setup support) and €1,990 a year after that. You grant options over a future STAK, so you do not need a notary to start. Setting up the STAK at the notary later costs €1,950 one-off (prices as of October 2026). | No notary: an agreement with the employee. You do need a sound valuation at grant and at payout. SARs are not included in Share Council's free plan. |
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| Control | No vote while they are options. After exercise the employee holds receipts and the votes sit with the board of the STAK. | None. The employee does not become a shareholder or receipt holder. |
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| Suits | Companies that want their team to become co-owners and expect to grow or one day sell. | Rewarding a few key people without new co-owners, or employees in other countries. |
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What changes for options in 2027?
Netherlands: on Budget Day (Prinsjesdag) 2026 the Dutch government submitted a bill called the Wet fiscale stimulering start-ups en scale-ups (Kamerstuk 37 024). It is meant to take effect on 1 January 2027, but it is not law yet: both the House of Representatives and the Senate still have to approve it. The Council of State was critical, so changes or a delay are quite possible (nader rapport, Dutch Ministry of Finance; Taxlive).
If it is adopted as proposed:
- The employee pays tax only when they sell the shares, no longer when they become tradable.
- Only 65% of the benefit is taxed. The government puts the effective rate at about 32%.
- It applies only to companies that receive a start-up or scale-up decision (beschikking) from the Netherlands Enterprise Agency (RVO), and to options granted on or after 17 April 2025.
- The employee may not transfer the options or shares in the first two years after grant, except on a sale of the company or a stock market listing. Employees with a substantial interest (aanmerkelijk belang) and options that count as a carried interest (lucratief belang) are excluded.
The bill only covers share options and the shares that come from them. A SAR is not an option on shares, so a SAR payout stays fully taxed as wage, even if your company gets an RVO decision. If the bill passes unchanged, the gap between the two instruments grows for Dutch start-ups and scale-ups. What the bill would mean for your option plan is explained in what the 2027 option bill means for employee ownership.
Which one fits your company?
Choose a SAR if you want a reward that grows with the value of the company, quickly and without new shareholders. That works well for a few key people, or if you do not yet know whether you want co-owners at all. Keep in mind that the company needs enough cash for the payout.
Choose options if you want your people to become co-owners and share in a sale or a funding round. "We most of the time promote options on depository receipts, because in the future the employee can become a true co-owner," says Quintus Willemse on the Equidam podcast. You can also combine the two, for example options for your core team in the Netherlands and SARs for people abroad. See how that works on the options and SARs page, or read more about SARs at Share Council.
Frequently asked questions
What is a SAR option?
People often say "SAR option" because a SAR works like an option that is settled in cash. The employee gets the difference between the share value at payout and the base value at grant, without buying anything. With an actual option they pay the exercise price and receive the shares.
How is a SAR payout calculated?
Payout = (value per share at the payout date minus the base value per share at grant) × the number of shares the SAR covers. With 1,000 shares, a base value of €20 and a value of €60 at payout, the gross payout is €40,000. The contract should say how the value is set on both dates, for example with the same valuation method each time.
What is the difference between shares and share options?
A share is a piece of ownership in the company. A share option is the right to buy that share later at a fixed price. Until the employee exercises the option, they are not an owner and have no right to dividends.
What is the exercise price of a share option?
It is the price per share the employee pays when they exercise the option. Most companies set it at the value per share on the day of grant, so the employee only gains from growth after that day.
Is a SAR the same as an ESOP?
No. In Europe, ESOP usually means an employee stock option plan, which gives employees options on shares or depositary receipts. A SAR plan pays cash and gives no ownership. In the US, ESOP means something else again: a retirement plan that holds company shares in a trust. The RSUs, ESOPs and SARs article explains the three.
Can I convert SARs into options later?
Yes, by ending the SAR agreement by mutual consent and granting new options. The exercise price of those options is then based on the value at that moment, so the growth up to that point is not in the options unless you settle it separately.
Read next
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