It was already clear: the dividend tax will not be abolished after all. This leaves around €1.9 billion in budgetary leeway. In a Chamber letter State Secretary for Finance Menno Snel explains how the Government is using this scope.
Dividend tax
Profit distributions (and similar payments) by legal entities are subject to dividend tax. This tax must be withheld and paid by the legal entity distributing the profit. Dividend tax amounts to 15% of the profit distribution. And that will remain the case. The previously announced abolition of dividend tax has been withdrawn.
For people living in the Netherlands, dividend tax is usually a withholding tax on income tax. Dividend tax is set off against income tax. Beneficiaries of profit distributions living outside the Netherlands cannot set off this tax.
As dividend tax remains in place, tax-efficient investment institutions (fbi) are permitted to continue investing in Dutch property.
Further reduction in corporation tax
The corporation tax rate will be further reduced to 20,5%. This rate applies from 2021. It had previously been proposed to reduce corporation tax to 22.25%.
This rate applies to the taxable amount in excess of €200,000. For the taxable amount up to €200,000, the rate is reduced to 15% (The proposal was to reduce it to 16%).
Transitional law on the limitation of depreciation on buildings
Buildings may be depreciated down to their residual value. For buildings used by the owner, the residual value is equal to 50% of the WOZ value. With effect from 1 January 2019, this will be changed to 100% of the WOZ value.
This measure is now being relaxed slightly. If the building was brought into use before 1 January 2019 and has not yet been depreciated for three years, the old rules may still be applied during these three years.
Transitional Law: the 30% scheme
The duration of the 30% scheme (for the reimbursement of extraterritorial expenses to expatriates) will be reduced from 8 to 5 years with effect from 1 January 2019. This would also apply to all 30% schemes already in place on that date.
For expats whose 30% scheme would otherwise have ended in 2019 or 2020, a transitional arrangement will now be put in place after all.
Easing of the current account measure
Directors and major shareholders (DGA’s) with a total debt of more than €500,000 to their private limited company would, with effect from 1 January 2022, be liable to pay a substantial interest tax on the amount exceeding €500,000. This measure is intended to discourage excessive borrowing from one’s own private limited company.
The announced measure has been relaxed in two respects:
- In addition to the announced transitional arrangement for existing home loan debts, new home loan debts will also be exempt from the measure;
- The €500,000 threshold applies in addition to this home loan debt, for the director and his or her partner jointly.
Emergency repair to the fiscal unit
The emergency amendment to the fiscal unity rules was originally intended to apply retroactively from 25 October 2017 at 11.00. This has been changed to 1 January 2018.
The bill relating to this emergency measure is not part of the tax plans for 2019. This is set out in a separate bill.
Treatment
The amendments announced in the letter to Parliament will shortly be incorporated into amendments to the draft legislation. The consideration of these draft bills had been suspended pending these amendments, but will now likely be taken up with vigour by the House of Representatives.
It is therefore not yet certain that the measures will be introduced as described above. We will be keeping an eye on the parliamentary debate for you.