The levy on individuals and business aims to raise €5 billion, supporting wider efforts to meet NATO’s 3.5 per cent expenditure target.

The Netherlands’ incoming coalition has proposed a temporary ‘freedom contribution’ to finance a sustained increase in defence spending, aiming to raise about €5 billion a year for military modernisation.

Under the coalition agreement between D66, the VVD and the Christian Democrats, the levy would apply to both households and businesses and be ring-fenced for defence.

The measure forms part of a wider fiscal package designed to meet tougher NATO spending goals agreed in 2025. The coalition has committed to increasing defence expenditure to 2.8 per cent of GDP by 2030 and 3.5 per cent by 2035. 

If approved by parliament, the plan would mark a steep acceleration in military spending for one of Europe’s more fiscally conservative economies. Dutch defence expenditure only returned to NATO’s 2 per cent benchmark in 2024, having remained below the alliance’s target since the early 1990s.

Officials say the dedicated revenue stream from the levy would give the defence ministry greater certainty in placing multi-year equipment orders, as European governments accelerate rearmament after Russia’s invasion of Ukraine. The funding is expected to support investment in air and missile defence, ammunition stocks, naval assets and cyber capabilities.

If adopted, the plan would be one of the clearest examples in Europe of a government explicitly linking new taxation to defence expenditure and signal that higher military spending is becoming a structural feature of fiscal policy rather than a temporary response to the war in Ukraine.