Outline agreement Dutch government 2024: the tax measures

16/05/24

This article was last updated on 29 May 2024.

The forming, Dutch conservative parties PVV, VVD, NSC and BBB reached an outline agreement on 16 May 2024. This outline agreement serves as a basis for further formation and should ultimately lead to a coalition agreement. The outline agreement includes concrete tax measures as well as expressing intentions for tax measures. It is striking that several recent tax increases for entrepreneurs have been partly reversed, namely the abolition of the dividend tax repurchase facility and the increase in energy tax. For individuals, relief is provided in the form of tax relief on labour and capital. Below you will find an overview of the currently known tax measures. Once more information becomes available we will supplement the measures with background information, you can then click on this measure for the further information.

What does this mean for you and your organisation?

This outline agreement indicates the direction of the government's policy and in addition contains certain concrete measures. Of course, nothing is set in stone until these plans have been incorporated into bills which are approved by the House of Representatives and the Dutch Senate. We remember a coalition agreement in which the abolition of dividend tax was announced, which, as you know, ultimately did not materialise.

Nevertheless, an outline agreement or coalition agreement is typically something to take into account in your business operations. The new cabinet aims to reduce tax burdens from 2025 for employees and entrepreneurs and to provide greater social security for people in need. A major boost for housing construction, improvement of purchasing power and a bright future for agriculture and fishing are also high on the agenda.

In relation to climate, we see a two-track policy: environmental taxes and excise duties are being reduced in many areas and subsidies are being limited, but (new) levies are also being introduced. Finally, we note that from a tax perspective the business climate has been given a prominent place in the agreement and signals from the business community about tax bottlenecks appear to have been listened to.

Overview of tax measures in the outline agreement

Below you will find an overview of the various measures mentioned in the outline agreement and the appendix. Some measures have not yet been budgeted, which means that the precise details are still lacking.

Business: corporate tax, income tax and payroll taxes

During the debate on the Tax Plan 2024, it was determined by amendment that this repurchase facility would be abolished by 2025. The government advised against abolishing the facility, and soon critical voices were heard from the business community. There are concerns about the Dutch international competitive position for listed companies, which leads to the expectation that headquarters of listed companies would leave the Netherlands. See also our previous articles (Dividend tax repurchase facility own shares abolished and The importance of the dividend tax repurchase facility). The political agreement now indicates that the facility should still be retained.

The earnings stripping rule limits the deduction of interest costs to 20% of the taxpayer's fiscal EBITDA. Interest up to 1 million euros is not subject to this interest deduction limitation. The coalition partners now want to increase the percentage from 20% to 25%. This 25% would be the European average. However, according to PwC's own research, there are only two EU countries that have set the interest deduction limitation lower than the 30% allowed under ATAD I. These are Finland with 25% and the Netherlands with 20% since 2022. Read more about the (differences in) implementation of ATAD 1 and ATAD II in all EU countries in this article.

When implementing the ATAD, the Netherlands opted not to implement the ATAD's GAAR due to the general application of the fraus legis doctrine. However, the European Commission has requested that the Netherlands introduce a GAAR in its legislation. As per the text of the ATAD's GAAR, “for the purposes of calculating the corporate tax liability, a Member State shall ignore an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, are not genuine having regard to all relevant facts and circumstances. An arrangement may comprise more than one step or part.”

Limiting gift deduction in the income tax and the corporate tax.
Profit exemption for small to medium companies will go from 13.31% (2024) to 12.7% in 2025, instead of the 12.03% intended in the Spring Memorandum.
The premium for the general unemployment fund for both permanent and flexible contracts will be increased by 0.1% as of 2026.

Climate and energy

The announced increased CO2 levy for industry will be reversed.
Reversal increase of 3rd, 4th and 5th energy tax brackets on natural gas by 22.4% as of 2025 and an additional 2.7% as of 2030.
Reduce energy tax of 1st and 2nd energy tax brackets on natural gas by 2.82 cents per m3.
Extend fuel excise duty reduction until 2025.
Introduction circular plastic levy (2028).
Abolition of the netting scheme for solar panels consumers, with effect from 2027.
Flight tax is differentiated according to distance.
Price risk buffer 10% sustainable energy subsidies (SDE).
The purchase of an electric car will continue to be supported, but all subsidies will stop in 2025, with the motor vehicle tax weight correction (Electric Vehicle, tax) remaining in place. It is unclear whether the reduced additional tax for electric cars is to end in 2025 instead of 2026 (not budgeted).

Individuals: income tax and payroll tax

The box 2 (income from substantial interest) rate will go from 33% (2024) to 31% (2025).
Reduce box 3 (savings and investments) rate, still unclear to what percentage (2024: 36%). 100 million euros will be made available on a structural basis for this purpose.
Limiting gift deduction in income tax and corporate tax. A first step will be taken in 2025. As of 2028, the gift deduction in the income tax will be standardised in order to treat different types of donations equally for tax purposes.
Reducing the burden on labour and reducing the marginal tax rate for citizens, for example through the introduction of an additional (third) income tax bracket (not budgeted).
It will be examined whether and if so, which, tax benefits under the extraterritorial cost scheme (which includes the expat scheme) will be reduced (not budgeted).
The mortgage interest deduction and the notional rental value (imputed income from homeownership) remain unchanged.
The purchase of an electric car will continue to be supported, but all subsidies will stop in 2025, with the motor vehicle tax weight correction (Electric Vehicle, tax) remaining in place. It is unclear whether the reduced additional tax for electric cars is to end in 2025 instead of 2026 (not budgeted).
Reversal of the increase in the statutory minimum wage as of 1 July 2024.
500 million euros will be structurally available from 2025 to increase the housing allowance. In addition, the child-related budget will increase from 2025 (structurally 300 million). In addition, the system reform for childcare will be continued (almost free for working parents and transfer to institutions).

VAT, excise duties and gambling tax

Abolition of reduced VAT rate for cultural goods and services - with the exception of cinemas and daytime recreation (2026).
Increase gambling tax from 30.5% to 37.8%.
Extend the reduction in excise duty on fuels until 2025.
A lower excise duty rate (red diesel) will be reintroduced for farmers, horticulturists and agricultural contractors.

The provision of accommodation within the framework of the hotel, guesthouse and holiday spending business (short stay) is currently subject to the reduced VAT rate of 9%. The forming parties intend to largely abolish this reduced VAT rate on accommodation with effect from the year 2026. The VAT rate on accommodation will then go from 9% to 21%.

Such a measure will not only affect hotels and holiday home rentals. It may also affect employment agencies when they house foreign temporary workers (short-stay) against payroll deductions.

The current low VAT rate for camping sites will be retained and exempted from the increase to 21%. It is foreseeable that such an exception will lead to discussions in practice, for instance when a camping site also contains holiday homes or for certain forms of 'glamping'.

Homeless shelters and Ronald McDonald Houses are also affected by a rate increase. However, they are compensated for this with a subsidy.

Other intentions yet to be specified

Further phase out tax schemes that have been negatively evaluated and tackle unintended constructions.
A generous, voluntary and long-term cessation scheme for farmers and gardeners will be designed in a tax-friendly manner.
In the context of more autonomy for local authorities, there will be room for a tax on undeveloped land with a residential function. The possibilities for a capped planning benefit tax (tax on the increase in the value of land because of an official change in intended use) or a comparable system for residential construction are used.
Obstacles to the realisation of sufficient housing, including 'fiscal incentives', will be removed.