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News | 19-09-2023 | 15:27
Today, State Secretary for Taxation and the Taxation Administration, Marnix van Rij, presented the 2024 tax plan to the House of Representatives. The plan contains measures that are essential for society and the tax system. These include measures to support purchasing power and fight poverty, to improve and simplify the tax system, and to achieve climate goals. The additional spending will be partly financed by the 2024 windfall, but tax levels will also be maintained through other measures.
Purchasing power and poverty alleviation
The government wants to prevent low-income people from falling into hardship. It will therefore provide €2 billion to support them in a structural way. One way to achieve this through the tax system is to increase the employment tax credit by €115. In addition, the halving of the tax credit for young disabled people will be abolished and the phase-out of the double general tax credit for people receiving benefits under the Work and Social Assistance Act will be frozen in 2024. These measures will ensure that those earning close to the minimum income receive more after tax each month.
The government has also decided not to adjust the thresholds for the top income tax rate and the second and third income tax rates for retirees entirely to the inflation rate, but to adjust them to 3.55%. As a result, high-income earners will pay slightly more income tax. Nevertheless, their purchasing power will still increase next year. The 1.6 billion euros raised by this measure will be used to pay compensation for low-income people.
The government is also increasing the tax-free commuting allowance from €0.21 to €0.23 per kilometre and simplifying the process for employers to provide public transport season tickets to their employees. As a result, the tax exemption for public transport season tickets and off-peak discounted season tickets has become more generous, and employees will not have to pay tax if they use their season tickets for business travel.
Box 3 and Pillar 2
The expected global minimum corporate income tax rate of 15% for multinational companies (Pillar 2) and the postponement of the implementation of Part 3 of the new tax code from 2026 to 2027 will cause a financial setback to projected revenues. Therefore, some additional measures are needed to keep public finances healthy and avoid burdening future generations.
One of the measures is the reduction of the profit tax exemption for SMEs from 14% to 12.7%. This tax exemption makes the income tax burden of self-employed business taxpayers lower than that of employees. The reduction of the tax exemption will narrow the gap between the income tax treatment of employees and business taxpayers. The main effect is that business taxpayers with higher incomes will pay tax on a larger share of their profits or income. The government has also decided to increase the excise tax on cigarettes and rolls of cigarettes. As a result, from April 1, 2024, the average price of a pack of 20 cigarettes and a pack of 50 grams of cigarettes will be €10.70 and €24.14 respectively (including VAT). The excise tax on alcohol will be indexed once and for all. In addition to generating additional revenue, the government aims to encourage healthy lifestyles and discourage unhealthy choices with these two measures.
The delay in the new box 3 system will result in lower box 3 tax revenues. To compensate for this, the government has made a one-off decision not to index the box 3 capital gains tax relief in 2024. The tax relief will remain at €57,000. Normally, the relief is adjusted annually to the rate of inflation. In addition, the box 3 tax rate will increase by an additional percentage point a year earlier, from 32% to 34%.
Tax avoidance arrangements and tax reduction schemes
In order to make the tax system more balanced and simpler, the Government has committed under its Coalition Agreement to tackle tax avoidance arrangements and to make tax relief schemes that have been viewed negatively less favourable or abolish them. The Government therefore intends to retain the Business Succession Plan (BOR) and the Deferral Plan for Shareholders Transferring Significant Interests in Businesses (DSR ab), but in a revised form, as these plans can prevent the continuity of a business from being threatened by gift and estate tax liabilities on transfers. The Government is taking a total of six measures to make these plans more robust and simpler in the future.
Special schemes related to motor vehicle taxation and the reduction of VAT rates have also recently been reviewed. Under this taxation scheme, initial steps are being taken to make some schemes less generous or abolish them because they have been assessed as inefficient and ineffective (or not efficient and effective enough). With regard to motor vehicle taxation, four schemes have been abolished and two have been cut. Campervan owners now pay only a quarter of the tax paid by car owners. The government hopes that they will pay only half of the latter in future, partly because CO2 Campervans have relatively higher emissions than cars. The registration of campervans may also be suspended, which in practice usually means paying less motor vehicle tax. From 2028, the scheme for classic cars will also change so that only vehicles manufactured before 1988 will be eligible. Currently, one reduced VAT rate will be abolished: the reduced VAT rate on inputs to the agricultural sector. The objectives of this scheme no longer apply in 2018.
Climate policy
Last spring, the government announced a series of tax-related greening measures in its additional measures to achieve its climate targets. The climate challenge facing our society means that we cannot afford not to move towards our agreed climate targets. The government therefore now wants to introduce further measures. These measures involve a voluntary agreement with the greenhouse horticulture sector and include a carbon tax on greenhouse horticulture from 2025 and the abolition of the reduced energy tax rate for the greenhouse horticulture sector. From 2024, the minimum carbon price will rise to €51.70 per tonne of CO2 in the electricity sector and industry.2The preferential policy of exempting steel and building materials manufacturers from energy and coal taxes will also be cancelled.
To accelerate the transition to zero-emission vehicles and to subsidize the purchase of second-hand electric vehicles, the initial flat rate of car and motorcycle tax payable by car buyers will be From 2025 this will increase by €200.
The government wants to encourage businesses to make sustainable investments, so it is providing more funding for the Energy Investment Tax Credit, the Environmental Investment Tax Credit and the Research and Development (Incentives) Act.
Caribbean Netherlands 2024
The 2024 tax package includes a tax package for Bonaire, Sint Eustatius and Saba (together “BES”) which will continue the reforms of the BES Tax Act, the BES Income Tax Act and the BES Payroll Tax Act initiated in 2023. These acts have barely been amended since 10 October 2010, when the islands became public bodies within the Kingdom of the Netherlands. For example, customary salaries for directors-majority shareholders are being adjusted. In addition, the turnover threshold for the general expenditure tax (BES’s equivalent of VAT) for small businesses will be raised to 30,000 USD per year. 30 million EUR will be provided in a structured manner each year to increase purchasing power in the Dutch Caribbean.
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