The Dutch cabinet is planning to make changes to the new asset tax system so that investors in some start-ups are not disadvantaged, the Financieele Dagblad reported on Thursday.

Start-up organisations have said they are extremely worried by the plan to tax shareholders on paper profits from 2028, which they say will drive investment elsewhere. Start-up investors would be exempt from the tax if the company were no older than five years and had no more than €30 million in turnover.

Officials are now working on a new, points-based system to define a start-up, so that fewer investors are liable for the Box 3 asset tax. Important criteria will be “scalability” and “innovation”, the paper said.

Prince Constantijn, special envoy for start-up lobby group Techleap, warned earlier that foreign investors would stay away under the current plan, and the mounting criticism led to finance minister Eelco Heinen promising a rethink.

Most criticism, which was amplified by Elon Musk on X, centred on the idea of making shareholders pay tax every year on the increase in value of their shareholdings in start-ups, even though that profit had not been realised. Shareholdings given to staff would also be taxed in the same way.

Start-up organisations such as Techleap and the DSA say the new proposal will still be very complicated, requiring all 11,000 start-ups and scale-ups in the Netherlands to be assessed for scalability and innovation.