Section 1:121 of the Wft sets out the Dutch bonus cap for the financial sector. The main rule of the bonus cap is expressed in the first subsection. It means that a financial undertaking is not permitted to grant to natural persons working under its responsibility variable remuneration that exceeds 20% of their fixed annual remuneration. The bonus cap applies to all staff members and not exclusively to identified staff.
Section 1:121(5) of the Wft provides for an exception to this rule for Dutch-based parent companies of international groups: under specific circumstances, such parent companies may be permitted to apply a bonus cap of up to 100% of their fixed annual remuneration. The fifth subsection stipulates that this extended bonus cap may only be applied to staff members working for the Dutch-based parent company under the following conditions:
- over the past five years,
- at least 75% of all staff members working under the responsibility of the group
- have been working outside the Netherlands for at least three years, for at least 50% of their working hours.The following points need further clarification:
- Must the Dutch-based parent company be the highest-ranking entity within the group at the global level?
No. The Dutch-based parent company must be the highest-ranking entity within the European Economic Area. It does not need to be the highest-ranking entity at the global level, but it must head the group at the European level.
- Must the entity heading the group be an authorised entity?
The entity heading the group does not need to be authorised under the Wft as a bank or investment firm, but it may be authorised.
- When does the five-year period start?
It starts five years prior to the exception being applied. The exception may be applied if, in that five-year period, at least 75% of all staff members of the group have been working outside the Netherlands for at least three years for at least 50% of their working hours. The entity heading the group does not need to be based in the Netherlands for at least three years in order to be eligible for the exception. Moreover, the three years do not need to be consecutive years.