Dutch easing of bankers’ bonus caps raises compliance concerns

The amendment, which was adopted by the Dutch Parliament on 27 January, lifts the 20% bonus cap currently in place on most employees working across the country’s financial services sector.

However, the change will not affect so-called ‘identified staff’ in line with the remuneration rules for financial services firms set out in the EU's Capital Requirements Directive IV (CRD IV) and the relevant regulatory technical standards. This category of staff includes senior management and personnel in risk-taking, meaning that they would still be subject to the bonus cap of 20% of their base remuneration.

Bonus caps of 20% on financial services firms were imposed in the Netherlands in the wake of the 2008 financial crisis, but businesses have said these restrictions have contributed to limiting their ability to recruit top candidates.

The amendment also seeks to remove restrictions on retention payments for all ‘non-identified’ staff at financial firms, including fintechs. The five-year retention period for fixed pay in the form of financial instruments will be removed. Remuneration awarded to these individuals will also no longer be required to be disclosed in companies’ annual reports.

The initiators of the amendment expect the change will attract more skilled talent, particularly IT professionals, to the Dutch financial services sector, and increase the sector’s overall competitiveness across the EU.

The amendment is one of the first major legislative reforms passed by the newly elected Dutch parliament, where talks are still underway to form a new cabinet after a snap election in October 2025.

Lous Vervuurt and Gijs De Haan, financial regulation experts in Amsterdam, said the amendment would be transformative for the Dutch financial services sector. “It equalises the playing field for most employees with their EU peers and may attract top IT talent, however, the carve-out for ‘identified staff’ keeps Dutch gold-plating in regards to bonus caps partially in place,” said Vervuurt.

However, they cautioned that the compliance burden on financial firms may increase to accommodate the changes. “It will mean bonus remuneration splits into a two-track system,” said De Haan, “which means financial firms will have to delineate who exactly qualifies as ‘identified staff’, which could pose an additional administrative burden. Whether this amendment will therefore increase overall competitiveness remains to be seen.”