Budget Day Special
20 September 2022
Traditionally, the Dutch Ministry of Finance presents its budget, including its tax plans for the coming year, on the third Tuesday of September ('Budget Day' or in Dutch Prinsjesdag).The draft bills will be discussed by the Dutch Parliament and may be amended during the legislative process. We have outlined the main proposals below. Unless indicated otherwise, the proposals are expected to enter into force on 1 January 2023.
Corporate income tax
1. First bracket: increase in rate and reduction of upper limit
The lower corporate income tax bracket will be decreased to EUR 200,000 (from EUR 395,000 in 2022). The tax rate in the first bracket will be increased from 15% to 19%. The tax rate in the second bracket will remain 25.8%. Therefore, profits up to EUR 200,000 will be taxed at 19% and any excess profits will be taxed at 25.8%.
2. Abolition of real estate-fiscal investment institutions
The legislature announced that as of 2024, fiscal investment institutions (fiscale beleggingsinstellingen) are no longer permitted to directly invest in domestic or foreign real estate. These measures are expected to be included in the Tax Plan for 2024. As a result of these changes, restructurings may take place in 2023. It will be further assessed whether RETT measures need to be taken to facilitate such restructurings.
Real Estate Transfer Tax (RETT)
3. Increase in general RETT rate
The general RETT rate will be increased from 8% to 10.4%. In certain cases a reduced tax rate continues to apply.
Wage tax4. Tax-free travel allowance
The tax-free travel allowance will increase from EUR 0.19 per kilometre to EUR 0.21 per kilometre. In 2024, the tax-free travel allowance will be further increased to EUR 0.22 per kilometre.
5. Limiting the 30% facility as of 2024
A 30% facility may be granted to 'inbound employees' with special skills. Under conditions, this allows up to 30% of the employee's salary to be treated as net remuneration. In 2024, the basis for calculating the 30% net remuneration will be capped at the Balkenende standard (Balkenendenorm). In 2022, the Balkenende standard is EUR 216,000. A transitional arrangement applies to employees who were entitled to the 30% facility in the last payroll period of 2022. The cap will apply to these employees as of 2026.
Income tax6. Box 3 Compensation
The legislature has announced that it is working on a proposal for a new Box 3 system based on taxation of actual income realised (as opposed to deemed return), to be implemented as of 1 January 2026. For the period FY2022 up to and including FY2025 the excessive taxation is remedied by dividing the Box 3 income into three categories, each with their own deemed rate of return. For certain taxpayers, this tax treatment already applies in relation to the FY2017-2022 tax returns. Alongside these measures, the applicable Box 3 tax rate will be increased from its current 31% to 32% in 2023, 33% in 2024 and 34% in 2025. The tax free allowance (heffingsvrije vermogen) will be increased to EUR 57,000 (currently EUR 50,650) for individuals and EUR 114,000 for fiscal partners.
7. Introduction of two brackets in Box 2 as of 2024
Two brackets will be introduced in Box 2 (taxable income from a substantial interest) in 2024. The first bracket will be set at EUR 67,000, taxed at 24.5%. Income exceeding EUR 67,000 will be taxed at 31%.
8. Abolition of the tax-deferred retirement reserve (fiscale oudedagsreserve)
The tax-deferred retirement reserve will be abolished. Any reserves accrued before 2023 will be settled under the current rules.
9. Reduction in self-employed deduction and increase in tax credit for working people
The self-employed deduction (zelfstandigenaftrek) will be reduced each year, starting with EUR 5,030 and gradually decreasing to EUR 900 in 2027. However, self-employed individuals will be compensated through an increase in the tax credit for working people (arbeidskorting).
Value-added tax (VAT)10. VAT scrapped on solar panels
VAT on the supply and installation of domestic solar panels will be decreased from 21% in 2022 to 0%. At present, private solar panel owners can recover all or part of the VAT paid by registering as an entrepreneur and filing VAT returns. In practice, this creates a considerable administrative burden, which will be reduced by the implementation of the 0% rate.
ContactPlease contact our Houthoff Tax team if you would like to discuss the impact of any of the above bills in further detail.
Please find all the proposals here.