Last update 6 September 2022
General context of Budget Day 2022
One of the main challenges for the government is the need to have additional income for the funding of expenditures related to inter alia the COVID-19 pandemic and due to the increase of prices for basic necessities among which energy and groceries.
In respect of the latter development, on 1 July 2022 the Dutch government sent a letter to parliament addressing the possible taxation of so-called excessive profits of (investors in) energy companies in order to compensate households for the increase of the energy prices. The government acknowledges that it will not be easy to introduce such a windfall tax ('solidariteitsheffing') or to increase the rate of the specific mining levies for oil and gas producers. For a more elaborate summary of the letter regarding the taxation of energy companies we refer to our website post of 26 August 2022.
Based on leaked information in the media, we understand that the government intends to increase the specific mining levies by EUR 2 billion as of 2023 as part of its plans to restore purchasing power.
An alternative option described in the letter would be the increase of the corporate income tax rate for all taxpayers. Based on the leaked information, the tax rate in this first bracket is expected to be increased from 15% to 19% as of 2023. This in addition to the already announced reduction of the first bracket from EUR 395,000 to EUR 200,000. The Dutch government does note however that an attractive business and investment climate must be taken into account, including a stable tax policy.
Another development that has the attention of the government is the wealth inequality. The government will give its appreciation of the outcome of a recent published report on this topic as well as its appreciation on the outcome of the evaluation of the business succession schemes on Budget Day 2022. In designing a new wealth taxation system the desired wealth equalization might play a role. Other measures aimed at wealth equalization, for instance an amendment of the tax deductibility of certain donations, might be considered. It is not certain whether and to what extent such measures will already be included in the Tax Plans 2023.
Following leaked plans to restore the purchase power, it is expected that the box 3 rate will, starting 2023, be increased in steps from 31% to 34%.
Apart from these more general developments, below we will first describe some of the measures, partly also forming part of the Coalition Agreement and/or the Spring Budget, that might be included in the Tax Plans 2023. In a separate paragraph we describe a number of national tax measures that are still pending and for some of which concrete tax proposals are expected in the first half of 2023.
- Lowering of the corporate income tax bracket
As of 2023, the bracket limit is expected to be reduced from EUR 395,000 (bracket limit since 2022) to EUR 200,000. As indicated above the tax rate of the first bracket might be increased from 15% to 19%. Profits exceeding EUR 200,000 will be taxed against the general corporate income tax rate (25.8 per cent in 2022). This reduction relates to the budgetary impact of the postponement of the implementation of Pillar 2 in the European Union.
- No amendment of the so-called 'Controlled Foreign Company' (CFC) rules
In the Coalition Agreement it was agreed to tighten the current CFC rules following recommendations by the Advisory Committee on taxation of multinationals. More recently, in the Spring Budget the state secretary indicated that due to the large overlap with Pillar 2, no budgetary benefit is expected and, moreover, the concurrence would be complex and administratively burdensome. For this reason no tightening of the CFC rules is expected on Budget Day 2022. For more information on (the status of) the recommendations made by the Advisory Committee on taxation of multinationals we refer to our website post of 16 April 2020.
- Box 2 (substantial interest): two brackets as of 2024
As of 2024, box 2 is expected to have two brackets. The first EUR 67,000 will be taxed at a rate of 26% and any excess will be taxed at a rate of 29.5%.
- Box 3 (income from savings and investments): transitional and new regime
As of 2026, a new box 3 regime (wealth tax) will be introduced. On Budget Day 2022 the transitional regime for the tax years 2023, 2024 and 2025 is expected to be published.
- The 30%-ruling
The basis for the calculation of the 30%-allowance will be reduced over a period of three years from the total taxable Dutch remuneration to the so-called Balkenendenorm (being EUR 216,000 in 2022 on the basis of the Standards for Remuneration Act).
- The travel allowance
The maximum of the tax-free travel allowance amounts to EUR 0.19 per kilometre. This maximum will be increased as of 2023. The exact details are not known yet.
- The required minimum salary for major shareholders
For tax purposes, the salary of a major shareholder active for his company should not be more than 25% less than, in short, the salary that would be fitting for a comparable employment and function. The Dutch government intends to reduce this 25% margin to 15% as of 2023.
- Increase of the general real estate transfer tax rate to 10.1%
The general real estate transfer tax (RETT) rate will be increased from 8% to 10.1% as of 2023.
Based on recently leaked plans this rate might be further increased to 10.4%.
The RETT for residential properties that will serve as the principal residence for the individuals purchasing such property will remain 2% (and 0% in specific situations).
- Abolishment landlord levy
The landlord levy will be abolished as of 1 January 2023. This abolishment is not part of the Tax Plan 2023 but will be arranged in a separate bill.
- Increase budget EIA and MIA
It has been announced that as of 2023, the budgets for the EIA and MIA will be increased by EUR 50 million and EUR 30 million, respectively.
- Increase of CO2 tax for industry
A minimum price for the CO2-tax for industry emitters has been announced. It will be designed as an additional levy within the existing tax.
- Changes to energy tax rates and structure
The energy tax rates structure will be simplified by integrating the renewable energy surcharge ('ODE') directly in the energy tax rates. Furthermore, it is expected that there will be a decrease of the rates for the lower brackets and increase of the annual energy tax deduction for households.
- VAT / solar panels
The VAT rate on the supply and installation of solar panels on or in the immediate vicinity of residential real estate will go from 21% to 0%.
Other tax developments
Reinforcement of action against dividend stripping
On 15 July 2022, the state secretary sent a letter to parliament about possible measures to strengthen the approach to dividend stripping. In this letter, the results of the internet consultation last winter were summarised. The government will now investigate a combination of one or more additional measures based on some of the alternatives described in the consultation round. This investigation will also take the outcome of a currently ongoing Supreme Court case into account. In addition, the letter states that the government has received signals that pension funds are involved in dividend stripping and that it is possible that an additional measure will be taken that will exclusively target pension funds that engage in dividend stripping. Any measures will be introduced as of 2024 at the earliest.
Entity classification rules
In 2021, the Netherlands proposed to overhaul its tax classification rules for Dutch and foreign entities (such as partnerships) with certain legislative proposals (see our tax flash of 30 March 2021). The state secretary now intends to submit the legislative proposal in the second quarter of 2023 with an envisaged entry into force per 1 January 2024.
In 2021, the Committee on Conduit Companies presented its advisory report to the Dutch government with six fiscal and nine non-fiscal policy options to prevent the abusive use of conduit companies (see our tax flash of 23 November 2021). The state secretary noted that the underlying policy objectives are expected to be met by the proposed EU Shell Directive. For this reason, no unilateral measures are expected.
Fiscal investment institutions
A report evaluating the rules for Dutch fiscal investment institutions ('fiscale beleggingsinstellingen') and exempt investments institutions ('vrijgestelde beleggingsinstellingen') was published on 7 July 2022. In the report, various alterations to these investment regimes are described. The government is studying this report and will respond to parliament and provide its policy intentions after the summer.
We would like to stress that the changes mentioned are only a selection and still intentions only. We will inform you as soon as possible on or directly after Budget Day 2022 about the final Tax Plans 2023 and other developments. You can visit our Budget Day 2022 page below. We strive to do our utmost to keep you informed on this webpage and via other communication sources on all developments.