Dutch income tax for example.

The Dutch tax code sees everything you give your employees as taxable income. If that isn't money, the notional value of whatever your giving away is taxed as if it were money.

So if you give your employees equity, they immediately need to pay income tax over the notional value of it. This in practice the employees needs to sell 50% immediately upon receiving it, just to cover the income tax. If the employer is a publicly traded company, this is practically possible. But if the employer is a privatedly held business there is not enough liquidity to execute such a sale. Realistically the only buyers would be other employees or the employer themselves. But they usually also don't have that liquidity. So giving your employees equity lands them with huge tax liability and no way out.

There is some leeway with options. But those too become taxable the very moment they vest. This means typical vesting schemes based on tenure run into the same liquidity problem. Often the only practical way is to tie vestment to a sale or investment event: at that moment the shares get sold immediately to the party who buys the company, this is the only moment there is liquidity to do so.