Most Dutch founders raising a pre-seed or seed round in 2026 will be offered some combination of three instruments: a SAFE, a convertible note, or shares in a priced round. The legal documents differ in obvious ways. The Dutch tax treatment differs in ways that aren't obvious at all — and one of them carries a 25.8% surprise if structured wrong.
The three instruments, quickly
| Instrument | Legal form | Cap? | Discount? | Interest? | Maturity? |
|---|---|---|---|---|---|
| SAFE | Forward contract on shares | Usually | Sometimes | No | No |
| Convertible note | Debt instrument | Usually | Usually | Yes (typically 4–8%) | Yes (typically 18–24 months) |
| Priced round | Equity issuance | — | — | — | — |
A SAFE is, in plain language, a promise: "we'll give you shares at our next priced round, at a price determined now." It's not debt and it's not equity until conversion. A convertible note is debt — it accrues interest, it has a maturity date, and if no priced round happens before maturity, it becomes a real loan you owe. Priced equity is just equity: the round prices the company, investors get shares, full stop.
SAFE — the YC import that mostly works
The Dutch tax authority's view on the SAFE has settled, after some years of uncertainty. A typical post-money SAFE is treated as a capital contribution (informele kapitaalstorting) from the moment it's signed. That means:
- No tax event on issuance. The company receives cash, books a capital reserve, and continues.
- No tax event on conversion. The capital reserve is moved into share capital; no income, no taxable gain.
- Investor's basis carries forward. Their cost basis in the eventual shares is the SAFE amount, not the post-conversion paper value.
One legal wrinkle that matters: SAFEs need to be issued by a BV with sufficient nominal capital headroom to absorb the eventual conversion, or with a clean authorisation in the articles of association allowing the board to issue the necessary shares. Most off-the-shelf Dutch incorporation packages don't include this. We see SAFE conversions delayed by 2-3 weeks at priced rounds because the articles need amending. Fix it at incorporation.
If you're using a US-template SAFE (the standard YC documents), have it reviewed by a Dutch corporate lawyer once. The cap-table mechanics translate. The governing law clause does not. Standard practice in NL is to redline the SAFE to Dutch law before signing.
Convertible note — the instrument that bites
A convertible note is debt for Dutch tax purposes, full stop. That has three consequences founders frequently miss:
1. Interest accrues and is deductible — sometimes
The note's interest accrues as a deductible expense in the BV's accounts. Good news. But if the interest rate is below market — say 4% when comparable arms-length debt would be 8% — the Belastingdienst can imputed-interest the difference, treating it as a hidden capital contribution. More commonly: if the interest is above market and the lender is a related party (existing shareholder, founder's family office), the deduction gets disallowed under the at-arm's-length doctrine.
For arm's-length VC convertible notes at standard terms (5-8% interest), this is rarely a problem. For founder-led "friends & family" notes at 0% or 12%, it can be.
2. Maturity without conversion = real debt
If your convertible note matures before you raise a priced round, the holder has the contractual right to call the principal + interest. Most well-drafted notes have an automatic "convert to common at the cap" clause at maturity, but cheaper templates don't. We've seen startups inherit €500k of real, payable, taxable debt on the maturity date of a forgotten note. Tax on that: not the note — the company doesn't owe tax on receiving cash — but the interest on the loan is now an actual liability the company has to service.
3. The 25.8% surprise — the "informal capital" trap
Here's the one that bites: if the convertible note is issued between related parties (e.g. a founder lending money to their own BV) at terms unfavourable to the lender, the Belastingdienst can recharacterise the entire instrument as an informal capital contribution. When you later "repay" the note, the repayment is treated as a dividend distribution, taxable at 26.9% Box 2 in the founder's hands.
The original cash going into the company was always meant as a loan to be repaid. But because it was structured as informal capital, the repayment becomes a taxable distribution. Net effect: you funded your own company and paid 26.9% tax to take your own money back out.
This is avoidable with careful drafting and an arms-length interest rate. It's avoidable with prior tax-advisor review. It's not avoidable after the fact.
Priced round — the cleanest treatment
An ordinary priced round — investors buy newly-issued shares for cash at an agreed valuation — is the cleanest path through Dutch tax law. The company receives cash, issues shares, books the difference between nominal value and issue price as a share premium reserve (agioreserve).
- No tax on the company from issuing shares.
- No tax on investors on acquisition — their basis is what they paid.
- Share premium can be repaid tax-free to shareholders later (subject to a formal capital reduction).
The downsides are operational, not tax: a priced round needs a notarial deed for the share issuance, a 409A-equivalent valuation memorialised in the cap table, a shareholders' agreement update, and (usually) a board resolution. Budget €5,000–€15,000 in legal + notary fees, depending on round size and how clean your existing cap table is.
The cap-table arithmetic — same money, different dilution
Tax aside, the three instruments dilute founders differently because of how the cap and discount work at conversion. Worked example: €1.0M raise into a BV currently held 100% by two founders, on a €5.0M post-money cap (SAFE/note) vs. a €5.0M post-money priced round.
| Instrument | Conversion price | New investor % | Founders' combined % |
|---|---|---|---|
| Post-money SAFE, €5M cap | Cap (€5M) | 20.0% | 80.0% |
| Convertible note, €5M cap, 20% discount, 6% interest, converted at 18mo | Lower of cap or discount | 22.4% | 77.6% |
| Priced equity round at €5M post-money | — | 20.0% | 80.0% |
The convertible note dilutes more because the accrued interest converts into additional equity. At 6% over 18 months that's an extra ~9% on the principal, which at conversion buys correspondingly more shares.
What we recommend
- Pre-seed or angel-led seed (< €1M): Post-money SAFE. Fastest, cleanest, lowest legal cost. Make sure your articles support conversion.
- Larger seed (€1M–€3M) with a lead: Priced equity. Once you have a lead investor and a real valuation, the legal cost of pricing is worth it.
- Bridge between rounds: Convertible note — but only with arm's-length terms and a tax review of the structure if any party is related to the company.
- Avoid: founder-issued notes, F&F notes with non-market terms, and any SAFE issued by a BV that hasn't first checked its articles.
Raising soon?
We review SAFE, convertible note, and priced-round paperwork for Dutch tax efficiency before you sign. Usually 4–6 hours of work, saves the surprises later.