This week it was Dutch Budget Day. On this day, the cabinet proposes its plans and budget for the next year. Various new tax measures were proposed. These are only proposals, so they may change in the legislative process.
In box 3, income tax on private assets is calculated. The method of taxation was changed in 2017, and rejected by the Dutch Supreme Court on the 24th of December 2021. This has caused a lot of political discussion. A new method of taxation has been developed to fix these issues.
Those who appealed their tax assessments, might get compensation should the new method be benificial to them. Those who didn’t appeal, won’t be compensated.
New rules from 2023 onwards
From 2023, the new method of taxation in private assets will be implemented. These will cause a lower tax burder, should their assets be in bank- or savings-accounts. Assets in other investments will incure more taxation.
Further changes in Box 3
Furthermore, the overal tax rate in box 3 will be raised from 31% up to 34% in steps of 1% per year, starting in 2023.
The limited liability company (Ltd.) (in Dutch – BV)
In the Corporate Income Tax, the tax rates will change. The lower tax rate will be raised to 19% from 15%. The higher tax rate will be raised to 25,8% from 25%.
Also, the lower tax rate will only be applicable on the first € 200.000 of profit, which used to be the first € 395.000 of profit.
This will raise taxation by up to € 29.000,- for BV’s (Ltd.’s) with more than € 395.000 taxable profit.
The director major-shareholder (in Dutch – DGA)
The director major-shareholder (in Dutch: DGA) is the person who has its “own” BV. For the DGA, several things will change.
The law on excessive loaning from the own BV will come into effect. This means that loans of more than € 700.000 from the own BV will be taxed as dividend. Some exceptions apply, for example for loans used to finance a private dwelling.
The tax rate on income (dividend or capital gains) from the own BV, or Box 2 in the Dutch income tax system, will be changed. It used to be a flat rate of 26,9%. It will now be a two rate system. The first € 67.000 of income will be taxed at 24,5%, any income above € 67.000 will be taxed at 31%.
The wage a DGA earns from employment at his own BV, is heavily regulated. These rules will only become stricter, possibly requiring a higher wage.
Currently, a large tax exemption applies in case a company is gifted or inhereted (under certain conditions). This exemption has been heavily discussed for years. For now, no changes have been proposed.
Relating to the carious crisis The Netherlands currently faces, several measures have been proposed.
The repayment schedule for debts to the Dutch Tax Authorities incured during the Covid poriod, will see some leeway. This includes the possibility for a repayment pause, a longer overal repayment time and a quarterly instead of monthly repayment.
To combat the energy-crisis, several measures are proposed. The VAT rate on energy will be re-raised to 21%. However, maximum rates for electricity and gas will be instated for households and enterprises. The details are yet to be announced.
The maximum travel allowance will be raised from € 0,19/km to € 0,21/km in 2023 and further to € 0,22/km in 2024.
A number of measures have been taken in an attempt to limit returns on rental properties among investors.
The transfer tax on all real estate is increased from 8% to 10.4% (except for the home intended to live in, which remains 2%). This should be seen in combination with a maximum rent for middle segment homes.
In order to give everyone a more equal chance on the housing market, the gift exemption of more than € 100,000 for the purchase of a house or repayment of a mortgage will be abolished as of 1 January 2023.
Various measures will be taken with regard to the CO2 tax in industry and an increase in the air passenger tax.
A toll for lorries has now been adopted, which charges a toll per kilometer driven. The implementation of this is being prepared, and the actual effective date of the levy will probably be in 2026 or 2027.
After the childcare allowance affair, things will be simplified. The childcare allowance will expire in 2025. Childcare will then be almost entirely financed by the government. In this context, the tax credit for working parents will lapse for children born from 2025 onwards.
- Entrepreneurs can no longer donate to the Fiscal Old Age Reserve, existing positions are maintained in accordance with the old rules.
- The averaging arrangement for the Personal Income Tax will be abolished, the period 2022-2024 is the last option.
- Periodic gift deduction is limited to € 250,000 per household, the details of this arrangement will be sent to parliament at a later date.
- The 30% facility is maximized to the “ministers-salary” (€ 216,000 in 2022), with a transitional arrangement for existing cases.
- Solar panels on or near homes will be taxed with 0% VAT. This should lead to an administrative simplification compared to the current situation of reclaiming the 21% VAT that is now paid.