On 20 May 2022, the Dutch government presented the 2022 Spring Memorandum to the House of Representatives. The Spring Memorandum contains changes in the budget from the current year as well as changes in the budget from 2023 onwards, to ensure more time for testing and assessing the proposed measures. Below, we have summarised the main tax proposals relevant for corporate taxpayers, real estate investors and individual taxpayers.
1. Dutch corporate income tax:
Bracket limit
A reduction of the bracket limit from €395,000 (2022 bracket) to €200,000 is proposed to ensure that all profits exceeding €200,000 will be taxed against the highest (25.8%) corporate income tax rate. This proposed adjustment should bring a budgetary return of €1.3bn and is related to the postponement of the implementation of the OECD Pillar II rules (in short: a minimum level of taxation of 15% for multinationals), which was to come into effect as of 2023. The Spring Memorandum notes that either the bracket limit or the tax rate(s) might be further amended if the future revenue to be derived from the implementation of Pillar II turns out to be lower than anticipated.
2. Dutch real estate transfer tax:
The real estate transfer tax rate for acquisitions of commercial real estate and buy-to-let real estate is proposed to be further increased from 8% (2022) to 10.1% effective as from 1 January 2023 (instead of the earlier proposed 9%). This change is expected to bring a budgetary return of €0.3bn. In this respect, it is noted that this rate was already increased from 6% to 8% effective as from 1 January 2021.
3. Dutch personal income tax:
Box 1
a. 30% facility for expats
Certain employees recruited from another country to work in the Netherlands can receive a maximum of 30% of their wages tax-free pursuant to the 30% facility for expats. It is now proposed to cap the 30% facility at the income of a certain standard (in 2022 this standard is set at a yearly income of €216,000). Transitional rules apply for the first three years upon implementation. It is yet unclear how this proposed arrangement will be structured, but it will not generate budgetary returns until 2024 (from then on it should structurally generate a budgetary return of €85m).
b. Efficiency margin for customary wage for director-major shareholder (DGA)
Pursuant to the Dutch wage tax act, a DGA should pay himself a customary wage for his activities at the benefit of his company. Based on the current efficiency margin, the customary wage of a DGA may be set 25% lower than the wage of the most comparable employment. It is now proposed to reduce this margin to 15% as of 2023, as a result of which DGAs may have to grant themselves a higher customary wage and thus become liable to a higher box 1 personal income tax amount. This measure is supposed to structurally generate €25m annually.
Box 2
It is proposed to introduce a two-bracket system in box 2 of the Dutch personal income tax (the regime for substantial shareholders) as from 1 January 2024. All income derived from a substantial shareholding up to €67,000 will be taxed against a rate of 26% (2022: 26.9%). Any income exceeding this threshold will be taxed against a top rate of 29.5%. This proposed amendment should bring a yearly budgetary return of EUR 0.1 billion.
Box 3
The government proposed to reverse the intended increase in the tax-free allowance in box 3. The 2021 coalition agreement included a measure to increase the tax-free allowance in box 3 in three steps from 2023 from €50,650 to approximately €80,000. The Spring Memorandum proposes not implementing this increase, resulting in an expected budgetary upside of €0.3bn.
Lastly, the Spring Memorandum also states that, in addition to the measures mentioned, the government will investigate how the (im)balance between the burden on capital (too low) and the burden on labour (too high) can be restored.
Should you wish to learn more on how these or other changes in Dutch tax law may impact your business, please do not hesitate to contact us.
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