Main tax measures of the 2024 Tax Plan for international organisations
The measures will apply from 2024, unless stated otherwise. The measures marked with a * have already been included in a previous legislative proposal.
Personal income tax and allowances
Lowering of SME profit exemption
The SME profit exemption is lowered from 14 per cent to 13.31 per cent. This reduction in the profit which is exempt from tax entails that SMEs will effectively pay more tax.
Phasing out the income-dependent combination tax credit
According to the Tax Plan 2023, the income-dependent combination tax credit (IACK) was supposed to be abolished by 2025. This phase-out has now been adjusted in the Tax Plan 2024 to better align with the changes to the childcare system. The amount of the IACK will be gradually reduced to zero over a period of nine years starting from 2027 for all eligible recipients. This means that the IACK will be completely phased out by 2035.
Depreciation limitation for buildings in own use to 100 per cent WOZ value
For entrepreneurs in personal income tax, the base value for depreciation of buildings in own use is set at 100 per cent of the property value (in Dutch “WOZ-waarde”). This was 50 per cent. This 100 per cent already applied to companies subject to corporate tax.
Substantial interest taxation (box 2): two brackets 24.5 per cent and 33 per cent*
The box 2 rate was 26.9 per cent in 2023. However, from 2024 onwards, box 2 is divided into two brackets. The first bracket taxes box 2 income up to 67,000 euro per person at a rate of 24.5 per cent. The second bracket will apply a rate of 33 per cent to any income exceeding this amount.
Maximum amount for excessive borrowing reduced
The maximum amount for the excessive borrowing rule is reduced from 700,000 euro to 500,000 euro. If the total amount of debts on the reference date (usually the year end) exceeds this maximum amount, the excess will be taxed as a fictitious regular benefit in box 2.
Exempt investment institutions regime restriction
From 1 January 2025, the regime for exempt investment institutions (VBI) will be limited to certain institutions under the Financial Supervision Act (in Dutch: “Wet Financieel Toezicht”). Entities that only invest the private assets of participants, including the assets of one family, will in principle no longer be able to use the VBI regime.
Increase in box 3 rate and non-indexation of tax-free assets
The box 3 rate increases from 32 per cent in 2023 to 36 per cent. In addition, the tax-free allowance in box 3 has not been indexed. The tax-free allowance therefore remains 57,000 euro.
Reduction of exemption for green investments
The exemption for green investments in box 3 will be reduced from 65,072 euro (2023) to 30,000 euro (for fiscal partners 60,000 euro) in 2025.
Association of apartment holders’ share and trust account notary qualify as bank deposits
The share in the assets of an association of apartment holders’ account (in Dutch: ‘Vereniging van Eigenaren’ or ‘VvE’) or assets in a notary’s trust account will be retroactively (as of 1 January 2023) placed under the category of bank deposits for the purposes of the taxation of savings and investments (box 3). This is because these assets are typically held in a bank account, making the bank deposits category a more suitable classification. This would mean that the lower flat-rate return calculation for bank deposits will be applicable.
Tax exemption for mutual receivables and debts in box 3
Effective from 1 January 2023, mutual receivables and debts between fiscal partners, such as those arising from annual settlement clauses in prenuptial agreements, and between parents and underage children will be retroactively exempted from taxation. This means that these receivables and debts no longer need to be included in the income tax return.
Postponement of new box 3 system from 2026 to 2027*
The implementation of a new box 3 system, based on actual returns, has been postponed from 2026 to 2027. A draft proposal for the box 3 system starting from 2027 has been consulted. The proposal primarily focuses on taxing actual returns through a capital growth system, where the increase in value is taxed directly each year. However, there are exceptions to this rule. The draft proposal includes a capital gains tax for real estate, shares in family businesses, and shares in start-up (innovative) enterprises. These exceptions involve taxing the profits when they are realised. Additionally, the first box 3 residence, which is mainly used for personal purposes, will be taxed based on an assumed (deemed) return. For more information, we refer to our Tax News article titled 'New box 3 combines capital growth and capital gains tax'.
Revised mutual fund (LP) transparency rules
Starting from 1 January 2025, there will be changes in the criteria for a mutual fund to be classified as an independent (non-transparent) mutual fund subject to corporate income tax. A fund qualifies as a mutual fund if it meets the following conditions:
- The fund can be categorised as an investment fund or a collective investment fund in securities, as defined in Article 1:1 of the Financial Supervision Act (Wft), and
- Transferable securities of participation exist within the fund.
A fund that does not meet these qualifications is considered fiscally transparent, and its assets are directly allocated to the investors and subject to personal income tax or corporate income tax.
Profit allocation for partnerships, general partnership, limited partnership, cooperative, and similar foreign entities
For income tax and corporate tax purposes, the assets and liabilities as well as the revenues and expenses/costs of a partnership, general partnership, limited partnership, cooperative, and transparent fund are allocated to its participants. This allocation is applied in proportion to each participant's entitlement in the respective entity. As a result, the separate assets are generally subject to box 3 taxation for the respective participants.
Rectifying conservational assessments concerning excessive borrowing
An issue stemming from the excessive borrowing from own company Act is undergoing rectification. This pertains to instances where the conservation assessment is reinstated if the taxpayer excessively borrows from a newly established foreign-based company following their emigration from the Netherlands.
Expansion of the reinvestment reserve in the event of discontinuation due to government intervention
The utilisation of the reinvestment reserve in cases of partial discontinuation due to government intervention becomes more accessible. This can arise, particularly in situations involving farmers participating in the nationwide cessation program. A reinvestment reserve established within a ceased business can then be allocated for reinvestment in a new venture.
Wage tax
Scale back of the expat scheme
The 30% ruling is being scaled back. The amount that can be reimbursed tax-free on a flat-rate basis is a maximum of 30% of the salary for the first 20 months, a reduced percentage of up to 20% for the following 20 months, and a further reduced percentage of up to 10% for the subsequent 20 months. After 60 months, the maximum duration of the 30% ruling has expired. This scale back measure does not affect expats who were already using the 30% ruling before 1 January 2024. Read our Tax News article here.
30% ruling: limitation of salary to 'Balkenende norm'*
From 1 January 2024, the 30% ruling can be applied up to a maximum of the WNT norm (2024: EUR 233,000). However, for expats who are already utilising the 30% ruling in 2022, this capping will not come into effect until 1 January 2026. Also read our earlier Tax News article.
Abolition of partial non-resident taxation
The partial non-resident taxation for expats is being abolished per 2025. This means that they can no longer choose non-resident taxation for income in box 2 and box 3. There is a transitional arrangement for expats who were already using or could use this facility before 1 January 2024. They can make use of the partial non-resident taxation until the end of 2026. Please also read our Tax News article.
Travel allowance
The tax-free travel allowance has been increased from 21 cents to 23 cents per kilometre. This is an increase of one cent compared to what was announced in the 2023 Tax Plan.
Simplifying exemption for public transport subscription
The two regulations for the tax-free provision of public transport subscriptions by employers are replaced by one exemption. This exemption ensures that no tax is due on any public transport card that is offered, provided that the employee also uses the card for business travel.
Wage cost benefits for the elderly's
The wage cost benefit (LKV) for older individuals will be reduced by 2025 and abolished by 2026. For employment relations that started before 1 January 2024, the LKV will be reduced nor abolished.
Abolition of the expansion of the work-related costs scheme*
The tax-free space of the work-related expenses scheme (WKR) was temporarily expanded to 3 per cent on the first 400,000 euro in 2023. From 2024 onwards, this increase will be abolished and a rate of 1.92 per cent will apply. For the remainder of the wage bill, the WKR rate will remain at 1.18 per cent.
Corporate income tax
Tax qualification policy for legal forms Act
The tax qualification process for foreign legal forms was always administered through a decree, but will be replaced by formal legislation known as the tax qualification policy for legal forms Act (in Dutch: "Wet fiscaal kwalificatiebeleid rechtsvormen"). Several substantive alterations are on the horizon, and this new legislation is to take effect from 1 January 2025.
For foreign legal forms that closely resemble Dutch entities, the qualification process will persist using the legal form comparison method. Additionally, two new methods will be introduced for foreign legal forms that are not comparable to Dutch entities: the 'symmetrical method' and the 'fixed method'.
The Act also eliminates the distinction between open (non-transparent) and closed (transparent) limited partnerships. All limited partnerships will be transparent in the future, indirectly addressing the goal of reducing hybrid mismatches in international contexts.
The transition from a non-transparent to a transparent limited partnership is considered a notional transfer and discontinuation. Therefore four transitional measures are put in place: (i) a roll-over facility, (ii) a stock merger facility merger facility, (iii) a roll-over facility in the case of taxable income from the provision of goods, and (iv) a payment deferral.
Please refer to our Tax News article for more information on this topic.
Strengthening the approach to dividend stripping
The term 'dividend stripping' encompasses both fraud (where dividend tax is reclaimed or offset twice) and tax planning (where dividend tax is reclaimed or offset by a party that, from an economic perspective, has no genuine interest in the dividend itself). While fraud is prohibited, the practice of tax planning is considered undesirable.
Hence, measures against dividend stripping are strengthened. Dividend tax allowances (such as set-off, refund, or reduction) already applied solely to dividend recipients who are the true beneficial owners of the dividend. The responsibility for proving this shifts to the dividend recipient. For dividend tax amounts up to EUR 1,000 per year, the burden of proof continues to rest with the tax inspector to maintain efficiency.
Additionally, the registration date in the Dividend Tax Collective Decree (in Dutch: "Verzamelbesluit Dividendbelasting") will be legally established for listed shares. For more detailed information on this topic, please refer to our Tax News article.
Expiration of dividend tax facility regarding repurchase of own shares
As of 2025, the facility in the Dutch dividend withholding tax that applies to the repurchase of own shares by listed companies will expire. The State Secretary of Finance, however, has promised to review this again in the spring of 2024. Please also read our Tax News article.
Pillar Two Implementation
The Minimum Taxation Act 2024, also referred to as Pillar Two, introduces a minimum effective tax rate of 15 per cent per jurisdiction for large international enterprises with annual turnovers exceeding EUR 750 million. Read more on this topic in our Tax News article.
Adjustments to FBI Regime
Starting from 1 January 2025, fiscal investment institutions (FBIs) are no longer allowed to directly invest in Dutch real estate. Unlike the internet consultation said, it remains possible for an FBI to engage in managing a real estate entity connected to the FBI. The so-called financing requirement remains unchanged; the financing with borrowed capital cannot exceed 60 per cent of the book value of the real estate. This rule continues to apply to financing, for example, direct investments in foreign real estate. For other investments, financing with borrowed capital is limited to a maximum of 20 per cent of the book value of those investments. Also, please refer to our Tax News article on this topic for more information.
Revised mutual fund transparency rules
Starting from 1 January 2025, there will be changes in the criteria for a mutual fund to be classified as an independent (non-transparent) mutual fund subject to corporate income tax. A fund qualifies as a mutual fund if it meets the following conditions:
- The fund can be categorized as an investment fund or a collective investment fund in securities, as defined in Article 1:1 of the Financial Supervision Act (Wft), and
- Transferable securities of participation exist within the fund.
A fund that does not meet these qualifications is considered fiscally transparent, and its assets are directly allocated to the investors and subject to personal income tax or corporate income tax.
Conditional withholding tax on dividends*
Following the introduction of the conditional withholding tax on interest and royalties on 1 January 2021, a similar withholding tax on dividends is in effect per 2024.
A conditional (or additional) withholding tax is levied on:
- Dividend payments to low-tax jurisdictions (in this case, jurisdictions with a statutory profit tax of below 9 per cent).
- Dividend payments to jurisdictions which are included in the EU list of non-cooperative countries.
- Dividend payments to hybrid entities and in the event of artificial arrangements which are intended to avoid Dutch withholding tax on dividends (in other words, situations of abuse).
Changes to the minimum capital rules
The minimum capital rules in the corporate income tax sphere (which only applies to banks and insurers) has an unequal effect with regard to the internal treasury activities. To rectify this imbalance, the minimum capital rule has changed. Interest charges on debts to group entities will, under specific conditions, no longer face deduction limitations. Simultaneously, the minimum capital rule percentage has been raised from 9 per cent to 10.6 per cent.
Fiscal Investment Facilities
The Energy Investment Allowance (EIA), the Environmental Investment Allowance (MIA) and the Arbitrary Depreciation of Environmental Investments (Vamil) have been extended by five years to 2029. Without this extension, these measures would cease to apply as of 1 January 2024. In addition, the deduction percentage of the EIA is structurally reduced from 45.5 per cent to 40 per cent.
Amendment to lucrative interest scheme following Dutch Supreme Court ruling
In certain instances the interests of managers in the company in which they work are regarded from a tax perspective as a so-called lucrative interest. A Supreme Court decision called for a change in the law. The evaluation of a lucrative interest considers not only share premiums and informal capital but also takes into account (shareholders') loans that contribute to compensation for work performed. These loans would indeed be factored into the company's share capital for the application of the lucrative interest scheme. This amendment is retroactively effective as of 26 june 2023.
No abolition of corporate tax deduction for donations
The deduction for donations in corporate taxation was to be entirely eliminated, but is maintained after all. In addition, the full amount of a donation made by a corporation to a Public Benefit Organisation (ANBI) will no longer be considered to be a distribution to the substantial interest holder. As such, there is no requirement to withhold dividend tax.
Preventing the splitting of real estate companies for interest deduction
Despite not being part of the Tax Plan, an announced measure for the year 2025 aims to discourage the splitting of companies primarily involved in real estate. When a company is subdivided into several smaller entities, it becomes feasible to augment the deduction of interest under the earnings stripping measure, commonly referred to as the EBITDA measure. This facilitates a more frequent application of the 1 million euro threshold. The proposal suggests a complete exclusion of the 1 million euro threshold for real estate entities engaged in the rental of property to third parties.
Climate and energy
CO2 minimum price amount for the electricity sector and industry
Now that the proposal to the bill on Tax Climate Measures for Industry and Electricity has been rejected, the minimum CO2 emissions price for both the electricity sector and industry will not be increased.
Fiscal Investment Facilities
The Energy Investment Allowance (EIA), the Environmental Investment Allowance (MIA) and the Arbitrary Depreciation of Environmental Investments (Vamil) are extended by five years to 2029. Without this extension, these measures would cease to apply as of 1 January 2024. In addition, the deduction percentage of the EIA is structurally reduced from 45.5 per cent to 40 per cent.
Flight tax
As of 1 July 2024 the take-off weight of an aircraft for passenger transport is reduced. As a result, the departing passenger on board of an aircraft between 4,000 kilograms and 8,616 kilograms is also included in the flight tax.
Extension of the reduced tax on unleaded petrol, diesel and LPG
As of 1 April 2022 the government reduced the tax on unleaded petrol, diesel and LPG in order to mitigate the increase in energy prices. The envisaged termination of the tax reduction is postponed until the end of 2024.
VAT and other
Amendment decree on VAT fixed establishments and VAT grouping*
The Decree of the State Secretary of Finance on VAT fixed establishments changes. Cross-border services between a head office or VAT fixed establishment that is part of a VAT group, and a VAT fixed establishment or head office established outside that EU Member State will be subject to VAT. Please read our Tax News article.
VAT/transfer tax concurrence scheme share transactions involving real estate entities
The transfer tax concurrence exemption changes in order to create a level playing field between share transactions and 'bricks and mortar' transactions. This relates to situations in which a company owns newly developed real estate and whereby the shares are transferred rather than the real estate itself (the ‘bricks and mortar'). In such instances neither VAT nor transfer tax is payable. If the real estate in the corporation is used for less than 90 per cent for VAT-taxable services (such as the rental of residential properties or real estate in the education or healthcare sector), the acquisition of the shares is subject to a 4 per cent real estate transfer tax. Please read our earlier Tax News article.
Temporary facilities for real estate transfer tax (in the case of general partnerships and funds for joint account)
As of 2025, open limited partnerships and, under certain conditions, open funds for joint account and similar foreign partnerships will be classified as fiscally transparent. This means that the assets and liabilities will be directly allocated to the partners. In this context, it is possible to decide to 'convert' this limited partnership or fund for joint account into a limited liability company (such as a BV or NV or foreign limited liability company) through a share exchange. In order to facilitate this for real estate transfer tax purposes, a temporary and conditional exemption from real estate transfer tax was introduced.
Gambling tax rate
The gambling tax rate increases from 29.5 per cent to 30.5 per cent.
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