Tax measures in the Rutte IV Coalition Agreement
Abolition of tax allowances and reform of the tax system
The new government is intending to abolish the present system of tax allowances so that people can no longer get entangled in the complexity of the rules or end up facing demands for huge repayments. Apart from abolishing tax allowances, the government also intends taking steps to simplify and reform the current tax system.
Wage and income tax
€3 billion reduction in tax burden
By introducing a tax cut the cabinet wishes to reduce the tax burden by €3 billion. This tax cut will mainly benefit low and middle-income households, working people and families.
Reduction of self-employed deduction
From 2023 the self-employed deduction will gradually be cut in steps of €650 until it reaches €1,200 in 2030. Compensation for those affected will be provided through an increase in the employed person’s tax credit. This measure will make it more attractive again to adopt the B.V. (private limited company) structure as a business form.
Abolition of the income tax averaging scheme
The income tax averaging scheme is to be abolished from 2023. This will have unfortunate consequences, particularly for business owners who discontinue their business from that year. Effective planning in 2022 could then pay off.
Increase in tax-free travel allowance
The rate for the tax-free travel allowance is to increase from 1 January 2024. The present tax-free travel allowance is capped at a maximum of €0.19 per kilometre. The new government still has to determine precisely how much the new amount will be.
Box 2: amendment of Excessive Borrowing bill
It had been proposed in the Excessive Borrowing from Own Company bill (Wet excessief lenen bij eigen vennootschap) that a director/major shareholder (DGA) (and their partner) could borrow no more than €500,000 from their own company (or companies). The coalition parties have now proposed that this limit should be increased to €700,000. It is envisaged that the legislation will enter into force on 1 January 2023.
Introduction of new Box 3 system from 2025
A new Box 3 system will be introduced from 2025. Income from savings and investment will, from then on, no longer be taxed on the basis of a notional yield but on the basis of the actual return. In anticipation of this plan, from 1 January 2023 the value with vacant possession ratio on rental property will be abolished and in 2023 the exemption in Box 3 will be increased to around €80,000. In addition the new State Secretary has announced the intention to introduce a new system sooner and that, for the time being, no Box 3 assessments will be imposed in 2022.
Abolition of income-related combination tax credit
After 2024 the income-related combination tax credit (IACK in Dutch) will be abolished for all new cases. From 2024 it will no longer be possible to apply for the IACK tax credit for children born in or after 2025. This tax credit will be abolished entirely from 2037.
Occupational disability insurance for the self-employed
The government wants all the self-employed to have compulsory occupational disability insurance from as soon as 2024.
Web module to provide certainty for the self-employed
To provide the self-employed with greater certainty when entering into a contractual relationship to provide services it is important to check whether the work will be deemed as done by an independent or by an employee. A pilot with a web module has been set up that the self-employed can easily use to check the nature of the relationship. The results of the pilot are currently with the Lower House for further consideration.
Inheritance Tax Act (and income tax)
Inheritance and gift tax in relation to the business succession scheme
The business succession scheme (BOR in Dutch) is to change. The coalition parties want to tighten up the rules surrounding gift, inheritance and income tax to counteract improper use of the scheme. In the context of the current study looking into the BOR, it is also being considered what useful changes and improvements to the scheme could be made. The results of this study are expected in the first quarter of 2022.
Widened gift tax exemption for an owner-occupied property to be scrapped
The widened gift tax exemption was introduced with the aim of reducing the overall level of mortgage debt. However, the exemption is now increasingly used to be able to buy more expensive owner-occupied homes. It is mainly for this reason that the exemption will be abolished from 1 January 2024.
Climate and environmental levies
Introduction of road levies
A ‘kilometre price’ will be introduced in 2030 with a fixed rate per kilometre for all passenger cars and delivery vans. The legislation on this will be drawn up during this government’s term of office. It will be based on the road tax legislation with the rate dependent on the number of kilometres driven per year. This tax will apply to both fossil fuel powered and electric vehicles.
Flight tax to increase from 2023
Met een verhoging van de vliegtaks in 2023 wordt beoogd structureel 400 miljoen extra te ontvangen.
Environmental investment tax scheme budget increase
The budget for the Environmental Investment Tax Scheme (MIA in Dutch) will be raised on an ongoing basis by €30 million. However, the MIA will no longer apply for the purchase of electric cars. Although it will still apply for:
- Fuel cell electric vehicles (FCEVs) (hydrogen powered)
- Solar-powered cars (with integrated solar panels)
- Electric vans
Energy-saving investment credit budget increase
The Energy Saving Investment Credit (EIA) budget will be increased by €50 million a long-term basis from 1 January 2023.
Motor vehicle purchase tax (BPM) exemption for company delivery vans to be phased out
The Motor Vehicle Purchase Tax (BPM) legislation currently includes an exemption for business delivery vans. This exemption will be reduced to zero in 2026 in three steps from 1 January 2024. Thereafter business owners will also be liable for BPM at the normal rate. Although the exemption will continue to apply to zero-emission vehicles.
Stamp Duty (Property Transfer Tax)
The stamp duty on non-residential property and upon the purchase of residential property by legal and natural persons who do not intend to live there on a long-term basis themselves, will increase from 8% to 9% from 2023. The purpose of this measure is to create more breathing space on the housing market for non-investors.