New Dutch tax incentives aim to boost FinTech sector amid declining investment

Key Dutch FinTech investment stats in H1 2023
• Dutch FinTech deal activity reached 35 deals in the first half of the year, a 46% drop from H1 2022
• Dutch FinTech companies raised a combined $108m worth of funding in H1 2023, a 68% decrease YoY
• PayTech and Blockchain & Crypto were the most active Dutch FinTech subsectors in H1 2023

The Netherlands has seen a negative H1 2023 with both investment and deal activity dropping significantly YoY. In the first half of 2023, Dutch FinTech deal activity amounted to 35 transactions, reflecting a significant 46% decrease compared to the same period in 2022. During the first half of 2023, Dutch FinTech enterprises secured a collective investment of $108m, marking a substantial 68% YoY reduction.

Fourthline, an end-to-end KYC and AML compliance solution, had the largest Dutch FinTech deal in H1 2023, raising $54.5m in their latest Series B funding round, led by Finch Capital. The company intends to use the funds to accelerate growth and expand operations. Fourthline now “employs over 270 people across The Netherlands, France, Spain and the UK; and works with European FinTech leaders including N26, Trade Republic, Qonto and Scalable Capital; and other regulated financial institutions such as NN, Solaris and Western Union.” Krik Gunning, co-founder and CEO, says: “We are on a mission to help regulated entities fight ever more complex financial crime. The huge leaps forward in technology over the last decade have been a double-edged sword: while consumers benefit from easier and quicker access to banking products, the nefarious actors have leveraged technologies such as deepfakes and social engineering such as money mules to increase the sophistication of their fraudulence. At present, approximately €1.8trillion dollars are laundered every year.”

As of January 1, 2023, the Netherlands overhauled its stock option tax rules to boost its allure for start-ups and scale-ups. Under the previous setup, employee stock options faced wage tax at rates reaching 49.5% upon exercise. This discouraged smaller businesses since the tax could apply before shares were tradable to cover it. The new regulations pivot: taxation ties to share tradability, unless employees choose the old system. This supports emerging enterprises by aligning taxation with a more practical moment.

PayTech and Blockchain & Crypto were the joint most active Dutch FinTech subsectors in H1 2023 with six deals each, a 17% share of deals. RegTech and PropTech were the joint second most active Dutch FinTech subsectors in H1 2023 with five deals each.

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