Political agreement to amend the 2022 Tax Plan: increase headline rate corporate income tax and tightening of the earnings stripping rules
On 21 September 2021, the Dutch Ministry of Finance submitted the 2022 Dutch Budget to parliament, including the Tax Plan 2022. During the following political debates, the coalition parties have reached an agreement resulting into an amendment package to the 2022 Dutch Budget.
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This includes tightening of the earnings stripping rules within the corporate income tax act, resulting in more restrictions to deduct interest for many corporate taxpayers. In addition, the caretaker government communicated to increase the headline rate of the corporate income tax from 25% to 25.8%. These changes are expected to apply as of 1 January 2022. The formal amendment to the Tax Plan 2022 is not yet published.
Aforementioned political agreement is designed by means of a motion submitted on 23 September 2021, which states various desired public expenditures. To finance the expenditures, it is suggested in this motion to (i) use the released resources derived from the already announced abolishment of the so-called job-related investment deduction (see our Tax Flash of 6 October 2020 for more background information), and (ii) tighten the earnings stripping rules, likely by decreasing the deductible percentage of EBITDA from 30% to 20%. The caretaker government agrees to the package deal outlined in the motion and a majority in parliament has voted in favour of it. Hence, it is likely that these changes will be formalised.
We note that in the Netherlands the earnings stripping rules currently limit the interest deduction, insofar as the balance of interest income and costs exceeds the higher of the 1-million-euro threshold or 30% of the fiscal EBITDA. We also refer to a recent study published by the Ministry of Finance in which adjustments to the earnings stripping rules have been suggested as well (see our Website post of 15 September 2021 in this regard).
Finally, the caretaker government now also follows-up on a previous motion voted in by parliament with respect to a salary increase in the health care sector. The caretaker government has communicated to agree with parliament to finance this expenditure partly by means of an increase of the headline rate of the corporate income tax from 25% to 25.8%.
We will keep you updated on further developments, and in any case once a formal legislative proposal to the Tax Plan 2022 is published. See our earlier shared Tax Flash of 21 September 2021 for an overview of the Dutch Budget, including Tax Plan 2022.
Guido DerckxPartner Tax adviser
Guido Derckx, senior tax adviser & partner, is a member of the Family Owned Business & Private Wealth practice group, as well as of the Investment Management and Corporate Tax Services practice groups in our Amsterdam office.T: +31 20 578 56 25 M: +31 6 53 56 41 90 E: [email protected]
Arco BobeldijkPartner Tax adviser
Arco C.P. Bobeldijk, tax expert, is co-chair of Loyens & Loeff’s Corporate Tax Services practice and a member of the Corporate Restructuring & Insolvency Team, the Public Enterprises Team and the contact person for Loyens & Loeff’s Tax Expert Team.T: +31 20 578 54 14 E: [email protected]