A Dutch EU proposal turns hybrid funding into a practical test of accounts, age, and trust.
The scene is easy to picture. A founder sits with an accountant and an investor memo. The loan on the table is subordinated, patient, and tied to growth. Under a strict state-aid test, it can still make the balance sheet look fragile. On 28 May 2026, the Dutch government said the Netherlands and seven other Member States want the EU undertaking-in-difficulty definition changed for promising start-ups and scale-ups.
The rule reads the balance sheet first
The undertaking-in-difficulty test, often shortened in Dutch policy language to OIM, helps decide whether a company can receive state aid. State aid can be a subsidy, loan, guarantee, tax advantage, or cheaper land. Article 107 TFEU gives the wider frame: public support may help, but it may not distort competition and trade inside the EU.
The signal has to become readable
The Dutch complaint is specific. Young growth companies often use capital that is neither bank debt nor ordinary paid-in equity. Subordinated loans, convertibles, and other quasi-equity can carry real investor patience. Under the current test, they may not count as full equity. The proposal asks Brussels to include them, or to extend the exemption period for growth SMEs to 15 years.
That is best read as a market-correction question, not a plea for easier money. Some companies are weak. Others are early, technical, loss-making, and still investable. A rule that misses the difference can block the wrong door.
A cold market makes definitions matter
A robotics start-up leaving a university lab shows the tension. It has engineers, prototypes, R&D hours, a convertible loan from early investors, and a first serious customer in logistics. Revenue is uneven. Payroll is heavy. The founders have already postponed salary more than once. On paper, the company looks thin. In the market, it may be building the automation Dutch employers are asking for.
CBS reported on 3 June 2026 that 64 percent of firms in the Netherlands experienced staff shortages in April 2026. Almost half of the firms with shortages, equal to 30 percent of all firms, named more automation as their main response. Smaller firms were more likely to scale back production because they lacked staff. Demand exists. The supplier still has to live long enough to reach it.
What the signal changes
The finance climate is not generous either. DNB reported in May 2026 that Dutch banks had lent EUR 340 billion to the business sector by March 2026, with just under half going to SMEs. SMEs paid about 3.6 percent on outstanding credits, against about 3.1 percent for non-SMEs. DNB points to smaller loan sizes and information gaps as possible reasons. When banks price opacity and public rules misread hybrid capital, a growth company pays twice for being hard to classify.
The accounts have memory
Two court signals explain why founders should not treat this as a distant Brussels file. In ECLI:NL:CBB:2026:160, the College van Beroep voor het bedrijfsleven upheld a DEI+ subsidy refusal under the OIM framework. The company had not made it plausible that it was less than three years old at application. The court also held that proportionality could not override European state-aid law.
In ECLI:NL:CBB:2025:97, the same court dealt with TVL subsidy and OIM classification. Annual accounts formed the starting point for the financial assessment. Accounting choices that could have been made did not help, because the company had not actually made them. The court held that the subsidies had been granted contrary to the temporary state-aid framework and were unlawful state aid.
For a small company, that is not courtroom poetry. It is cash. When aid is treated as unlawful, recovery with interest can follow. The public-support record is not separate from the ledger. It lives inside the ledger.
One connected table
The OIM proposal fits a wider Dutch start-up push. In September 2025, the government presented an agenda covering capital, talent, deep tech, Techleap funding, risk capital, a EUR 250 million blended-finance instrument, and work on a national investment institution. On 1 April 2026, it opened consultation on tax measures for employee share options and a new start-up and scale-up definition for the future box 3 system.
The option proposal has its own state-aid sensitivity. The government says European Commission permission is needed so the employee participation regime does not become unlawful state aid. Even a measure designed to help start-ups has to pass the public-money test.
For a founder, these instruments can feel separate: payroll support here, an investor note there, a subsidy application later. Under the state-aid frame, they sit in one trust picture.
The better question at the table
DNB's productivity work adds a useful warning. Future Dutch growth will need more productivity, while capital and labour still sit too often in less productive firms. Targeted schemes can help when they address market failures, such as knowledge spillovers or credit information problems. Untargeted support can distort the market.
What founders should check
That is the line to hold. The Netherlands is not asking Brussels to bless every loss-making company. The useful goal is narrower: stop treating patient growth capital as distress when the economic substance says something else, while keeping the guardrail against public money keeping weak companies alive without a productivity case.
Back at the robotics table, the conversation changes. The founder still needs customers, cash, and margins. The company file also has to explain the age of the undertaking, the history of old entities, the meaning of subordinated loans, the timing of losses, and why the annual accounts say what they say. A future rule change may help. It will not repair a confused record after the fact.
For small business owners outside the start-up world, the lesson is broader. Public support is not only about whether a scheme exists. It is about whether the company can show why it belongs inside that scheme. The market may understand the story before the form does. The ledger still has to translate it.
For now, the 28 May proposal is still a proposal. A legal change still has to come from Brussels. Even so, the direction matters because it touches a real Dutch tension. The economy needs younger companies that can grow, automate, export, and hire. Public finance still has to defend fair competition.
A good rule should not confuse ambition with distress. A good company should not expect ambition to repair weak accounts. Between those two sentences sits the work: cleaner capital records, calmer subsidy choices, and a balance sheet that tells the same story to investors, lenders, and the public purse.
Sources
- CBS source
- Rijksoverheid – Dutch proposal to amend the OIM definition
- Rijksoverheid – Earlier Dutch position on scale-ups and OIM
- Rijksoverheid – General state-aid control and recovery risk
- Rijksoverheid – State-aid notification and clawback risk
- Rechtspraak – Court signal on OIM proof and company age
- Rechtspraak – Court signal on annual accounts and OIM classification
- Rijksoverheid – Fiscal support for start-ups and scale-ups
Referenced in the article
Column | Market Pulse
Dutch Heat Planning Is Reaching Rosters, Rent and Margins
The new adaptation agenda turns hot weather into a daily business.
Column | Ledger & Tax
When a Below-Market Sale Becomes VAT Abuse: What the Advocate General’s Opinion Means for Related-Party Transactions
A managing director buys a company car at half its market.
Column | Human Resources
When Compliance Becomes Permission to Discriminate
FNV, the Netherlands' largest trade union, filed a complaint with the European Commission.
The Polder is written for readers who need the Dutch business environment translated into practical meaning. Corrections, source policy and editorial accountability are part of the publication record.
