Introduction
The Dutch Cabinet unveiled the Tax Plan 2025 on Prinsjesdag, marking the new government’s first fiscal policy proposals. The plan prioritizes short-term measures over long-term solutions but also addresses specific issues and suggests minor corrective legislation.
Lowering the top rate threshold and Indexation
The proposed changes to wage and income tax split the general tax rate into two tiers. This aims to provide targeted relief for middle-income taxpayers. Additionally, the phase-out point for the general tax credit will link to the legal minimum wage. The plan also proposes raising the top income tax rate threshold, reducing the number of taxpayers in the highest bracket. This threshold will be indexed annually for inflation, correcting a previous oversight.
Reversing the increase in Box 2 rate
The Cabinet plans to lower the Box 2 second-tier rate from 33% by 2 percentage points. This adjustment aims to balance the tax burden more equitably among significant shareholders, employees, and income-tax entrepreneurs, reducing the top rate for significant shareholders to 48.80%.
Deductions for non-self-employed workspaces
The proposed measure clarifies the deduction of costs and expenses related to non-independent workspaces within business assets. According to case law and parliamentary history, costs typically borne by a tenant are not deductible.
Limiting tax deductions for donations
Starting January 1, 2025, the Cabinet proposes abolishing the corporate donation deduction and the donation deduction in corporate income tax (Vpb). However, personal income tax deductions will remain unchanged.
Adjustments for remote work taxation
Proposals aim to ensure tax recognition for remote work, even if performed entirely outside the Netherlands.
Anti-fragmentation measure for generic interest deduction limitation
The government proposes adjusting the earnings stripping measure in the Corporate Tax Act 1969. Starting January 1, 2025, it will exclude the deduction capacity for real estate entities with properties rented out to third parties.
Adjustment of the liquidation loss scheme
The government suggests two changes to the liquidation loss scheme within corporate tax: First, modifying the calculation of the sacrificed amount for participation to determine the eligible liquidation loss. Second, adjusting the intermediate holding provision in the scheme.
Adjustment of the waiver of tax exemption in corporate tax
The proposed measure aligns the waiver of tax exemption in corporate tax with revised loss offsetting rules introduced in 2022. For deductible losses exceeding €1 million, the waiver will be fully exempt if it surpasses the losses incurred in the year. The current system will remain for losses up to €1 million, partially maintaining the treatment of the waiver in corporate tax.
Partial reversal of 30% scheme reduction and increase in salary norm
The amendment to the Tax Plan 2025 proposes largely reversing the reduction of the 30% scheme from the 2024 Tax Plan (the ’30-20-10 scheme’). The maximum tax-free reimbursement will be set at 27% starting January 1, 2027. For incoming employees in 2025 and 2026, the rate will be 30%. The salary norm will increase from €46,107 to €50,436 (2024 prices), and for incoming employees under 30 with a master’s degree, from €35,048 to €38,338 (2024 prices). Transitional provisions will apply to those already using the 30% scheme before 2024, maintaining a 30% rate and the old (indexed) salary norms until the end of their term.
Reduction of transfer tax rate for residential properties to 8% by 2026
Starting January 1, 2026, the general transfer tax rate for residential properties will decrease from 10.4% to 8%. This rate will apply to all property acquisitions, except where the existing reduced rate of 2% or an exemption, such as the first-time homebuyer exemption, applies. These exceptions are for buyers who will occupy the property for an extended period.
Adjusting the definition of preferred shares in the 2025 tax succession facilities adjustment bill
The bill for adjusting tax succession facilities in 2025 includes a definition of preferred shares. Feedback from an internet consultation indicated ambiguity in cases involving hybrid shares, which have characteristics of both preferred and ordinary shares. To resolve this ambiguity, the government plans to amend the definition of ‘preferred shares’ concerning hybrid shares in a legislative amendment.
Retaining the buyback facility in dividend tax
The government wishes to retain the buyback facility in dividend tax due to its impact on the competitive position of Dutch companies and the Dutch business climate. Therefore, the bill stipulates that the planned abolition of the buyback facility, set for January 1, 2025, will not proceed.
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