New tax interest rates 2024

This article was last updated on January 9, 2024.

Tax interest is applied when there is a discrepancy between your initial tax payment and the final assessment by the tax authorities. If you are required to pay additional taxes, you will incur interest charges. Conversely, if you are eligible for a tax refund, you will earn interest on that amount. A new methodology for determining tax and collection interest rates has been introduced as of 1 January 2024.

New system for tax interest from 2024

On Budget Day, the Dutch cabinet revealed in a parliamentary letter that a revamped system for determining tax interest rates would be implemented starting 1 January 2024. The primary objective of this new system is to narrow the gap between the tax interest rates applied to corporate income tax and withholding taxes, and those applied to personal income tax and other forms of taxation. Going forward, interest rates will be updated annually, based on the latest European Central Bank (ECB) interest rate published as of 31 October of the preceding year. These new rates will become effective on 1 January of the subsequent year, with the first instance being 1 January 2024.

Tax interest for corporate tax, withholding tax and solidarity contribution

Under the new system, the tax rate for corporation tax, withholding tax and solidarity contribution are set at the ECB rate for main refinancing operations plus 5.5 percentage points, rounded to half percentage points and with a minimum of 5.5 per cent.

On 26 October 2023, the Board of Directors of the European Central Bank decided to set the interest rate for main refinancing operations (unchanged) at 4.5 per cent, so that based on the system, the tax interest rate for corporate tax, withholding tax, and solidarity contribution amounts 10 per cent as of 1 January 2024 (namely 4.5 per cent ECB interest rate plus 5.5 per cent).

Tax interest for other tax resources

The tax rate for other taxes (including income tax, payroll tax, VAT, dividend tax) is set at the ECB rate for main refinancing operations, plus 3 percentage points, rounded to half percentage points and with a minimum of 4.5 per cent. After the aforementioned decision of the Board of Directors of the Central Bank, the tax interest rate for income tax and other taxes amounts 7.5 per cent as of 1 January 2024 (namely 4.5 per cent ECB interest rate plus 3 per cent).

Tax interest rate for Allowances (in Dutch: Toeslagen)

Starting 1 January 2024, the interest rate for Allowances amounts 4 per cent.

Collection interest system

From 1 January 2024, the recovery interest rate for all tax resources and surcharges amounts 4 percent. This decision is provisional and primarily made for implementation purposes. Future considerations are underway to reevaluate and potentially redesign the structure of collection interest rates, a task that will be undertaken by a subsequent cabinet.

Next steps

Further review of the tax rate system is also planned. To this end, scenarios are being developed for the next cabinet.

Background

Tax interest is assessed when there's a discrepancy between the tax amount you initially declared and paid, and the Tax Authorities' final assessment of that amount. If you're required to make an additional payment, you'll incur tax interest. Conversely, if you're eligible for a tax refund, you may also be charged interest.

For personal income tax and corporate income tax, the period during which tax interest is calculated begins six months after the conclusion of the calendar year or financial year to which the tax is applicable. For VAT and wage tax, tax interest is charged on any additional assessments imposed by the Tax Authorities, which occurs when it is determined that insufficient VAT or wage tax has been declared and paid.

The tax interest system has two separate interest rates. One rate is designated for corporate tax and withholding tax, while a different rate is applicable for other tax categories and collection interest.

Period up to 31 December 2023

In an earlier parliamentary letter dated 26 June 2023, specific details were provided about the tax interest rates to be in effect until 1 January 2024.

The tax interest rate for income tax and other taxes increased from 4 per cent to 6 per cent, effective from 1 July 2023.
The tax interest rate for payable corporate tax was temporarily frozen at 8 per cent, rather than being increased to 10.5 per cent as initially planned. This change was retroactive to 1 March 2023.
Temporarily, the Tax Administration applied a tax interest rate of 10.5 per cent when it owed interest on a corporate tax assessment. This rate remained in place until the amendment decree that mandated the temporary freeze came into effect.