Dutch Budget Day 2025 – Energy and Environment

The Energy Investment Allowance (EIA) is a tax incentive scheme designed to stimulate investments in energy efficient technologies, CO₂ reduction measures and renewable energy assets by businesses. The EIA allows for a one-time deduction in addition to the regular depreciation of an asset of 40% of the investment amount, providing a permanent reduction in corporate income tax liability.

The maximum eligible investment amount under the EIA is capped at EUR 151 million, with a distinction made between taxpayers who (a) operate a standalone business and (b) operate a business which is part of a partnership. To prevent taxpayers from exceeding this cap by claiming EIA on energy investments made both individually and through partnerships, a new consolidation provision is being introduced. Under the proposed measure, the total amount in investments eligible for EIA cannot exceed EUR 151 million per taxpayer per year.

For the supply of electricity to grid connections that have a dwelling function (“verblijfsfunctie”), currently a generic energy tax deduction of EUR 524,95 applies. It is proposed to increase this deduction by EUR 9,30 as of 1 January 2026.

It has previously been suggested to limit the energy tax deduction to households only. Contrary to expectations, this suggestion has not been included in the current legislative proposals.

The energy tax contains several exemptions, including for electricity and/or gas used for metallurgical or mineralogical processes. To determine eligibility, the Standard Industrial Classification (Standaard Bedrijfsindeling, SBI) is used. This classification will be updated to ensure it remains aligned with current economic realities and is comparable across the EU. The existing SBI 2008 codes (SBI2008) will be replaced by the new SBI 2025 codes (SBI2025).

The CO₂ levy for industry is – in short – due for companies that fall under the ETS 1 system as well as nitrous oxide and waste disposal installations. It effectively functions as a minimum CO₂ price and is only levied insofar the average EU ETS price falls under a certain price level. Each company also obtains a certain amount of free dispensation rights.

During 2025 the minimum price was EUR 87,90 per ton CO₂, and it was planned to increase this rate to EUR 100,74 per ton CO₂ as of 2026. In light of challenging market conditions, the government will reduce the minimum CO₂ price as of next year to EUR 87,90 per ton CO₂. Additionally, the number of dispensation rights will be increased to 1.023 and will remain constant beyond 2026, rather than being phased out.

Although the CO₂ levy will not be officially abolished, these adjustments are expected to result in minimal financial impact from 2026 onwards. However, if the levy rate exceeds the ETS price, some companies may still be subject to the levy.

The relief measures introduced for the CO₂ levy for industry do not apply to waste incineration plants. For these installations, the levy will be tightened as part of a broader climate policy package:

• The rate will gradually increase to EUR 295 per ton of CO₂ by 2030 (baseline: EUR 152).
• The exempted emissions will remain at the baseline level (0,6 Mton fossil CO₂ emissions) until 2030, after which they will be phased out in equal steps until reaching zero by 2033.
• Trading of dispensation rights between waste incineration plants and other industrial installations will be prohibited.

Water tax is currently due on the supply of water (at a rate of EUR 0,425 per m³), but only up to 300m³ of water supplied per year. It is proposed to increase this cap to 50.000 m³ as of 1 January 2026 and to abolish this cap as of 1 January 2027.

Water tax is currently due on all water delivered via a water grid, which includes water that is not of drinking quality (such as river water or recycled water). As of 1 January 2027, water tax will only be due on the supply of water of drinking quality.

Currently, suppliers with less than 1.000 grid connections are exempt from water tax. This exemption will be abolished as of 1 January 2027 and replaced with an exemption for supplies by a “small or very small collective water supply” as meant in the Drinking Water Act.

Currently, a fixed flight tax of EUR 29,40 per passenger that departs from the Netherlands applies (transfer passengers excluded). It is proposed to differentiate the rate per distance class as of 1 January 2027. The rates will apply per destination country (i.e., disregarding the actual flight distance), and are based on three categories that are determined based on the distance between Amsterdam and the destination country’s capital:

The law will include an exhaustive list of countries falling into category A or B. If the country is not included on the list, or if the destination country is unknown, category C will apply.

For the Caribbean countries of the Kingdom of the Netherlands, the lower rate of category A will remain applicable. Transfer passengers will also remain exempt.

The Dutch government initially agreed to introduce a “circular plastic levy” by 2027. However, due to expected leakage effects, it became evident that the budgetary objective could not be achieved and would only provide for a limited stimulus to the circular economy. As a result, the government decided not to introduce the plastic levy.

To cover the budgetary shortfall of EUR 567 million, three alternative measures are now being proposed. First, the waste disposal tax will be amended by abolishing the exemption for sewage sludge. Second, a specific rate will be introduced for the disposal of exempted waste. Third, the general rate of the waste disposal tax will be raised from EUR 39,70 per ton of waste to EUR 90,21 per ton in 2028, eventually reaching a structural rate of EUR 113,81 per ton from 2035 onwards (based on the 2025 price level).