The Budget Proposal is in essence a policy statement summarizing the ambitions of the Government for the following year(s). The announced measures must still be translated into law proposals, which then must still be approved by Parliament. Subsequently, the measures announced in the Budget Proposal may be subject to changes caused by the political and legislative procedures to follow.
The most important announced tax measures can be summarized as follows:
Corporate income tax:
- Reduction corporate income tax rate from 20% (for profits up to € 200,000) and 25% (for the excess) to 16% and 21% respectively in 2021;
- Limitations to the ability to carry-forward losses will be introduced;
- A "blacklist" of non-cooperative jurisdictions will be introduced;
- Multinationals will be obliged to report on their activities per EU country and per country that is on the above-mentioned "blacklist";
- The dividend withholding tax (dividendbelasting) will be abolished by 2019;
- Source taxation on interest and royalties on outbound financial streams to countries with a very low tax rate ("low tax jurisdictions") will be introduced;
- Measures to limit the deductibility of debt in order to promote equity financing will be introduced.
Personal Income tax:
- The number of income tax brackets will be reduced to a base rate of 36.93% (for income up to approximately EUR 68,600) and a top rate of 49.5%.
- The rate for the taxation of income from substantial shareholdings (Box 2) will increase from 25% to 28.5% by 2021.
- The general levy rebate (algemene heffingskorting) and the employment rebate (arbeidskorting) will be increased.
- The deductibility of mortgage interest will be further limited by reducing the tax rate for deductibility in annual steps of 3% from 2020 until it reaches the base rate. In 2021 the effective rate at which it can be reduced is 43%
- The imputed income from owner occupied dwellings (eigenwoningforfait), which is calculated as a percentage of the WOZ value (an annual public valuation), will be reduced with 0,15% to 0,6%.
- The exemption Investment income in Box 3 will be increased to EUR 30,000 and a system for taxation based on the real yield will be developed (rather than the current notional yield).
- A limitation of the tax benefits available to expats will be introduced; the 30% ruling period is reduced from 8 to 5 years
- The reduced VAT rate of 6% will be increased to 9%.