The Government has submitted a revised budget proposal to the House of Representatives. The proposals include changes to Box 3, Box 2 and social security.
Capital gains tax
The Government has opted for a structural solution for Box 3 by switching to a capital gains tax, under which gains are taxed upon realisation rather than on paper. This is intended to bring the tax system more into line with economic reality.
- From 2027: The tax-free allowance in Box 3 will be reduced to the 2020 level, namely €30,846. The flat-rate allowance for other assets, including rental income and benefits derived from the owner’s own use of immovable property, will also be increased by 1.5 percentage points.
- From 2028: Capital gains tax is being extended to all financial instruments, such as shares, bonds and options. This means that capital gains tax will apply to approximately 90% of the assets subject to capital appreciation in box 3. From this year onwards, a tax-free allowance of €1,000 will also apply.
- From 2030: The move to a comprehensive capital gains tax on all assets.
To fund these proposals, the high rate in Box 2 will be temporarily reduced to 29.2% for four years from 2027. This is intended to encourage business owners to withdraw more profit from their businesses. In addition, the option to borrow from one’s own private limited company in five instalments of €80,000 will be capped at €100,000, down from €500,000, with the exception of loans for one’s own home.
Purchasing power and social security
To boost purchasing power and make work more rewarding, the Government is introducing additional measures. The increase in the working tax credit will be reduced, namely by €133 instead of €173. The income threshold for the top tax rate will be raised from €78,426 to €80,578. As regards social security, the previously planned cuts to disability and unemployment benefits for this year have been scrapped. The government intends to conclude a social agreement with employers and trade unions on reforms to these benefits.
Other proposals
Other suggestions and topics for discussion include:
- A reduction in excise duty on petrol and diesel in 2027 and 2028 totalling €2.1 billion.
- Reduction in the air passenger tax.
- Additional investment in (regional) infrastructure.
- A tax investment reserve for the agricultural sector.
- Temporary reduction in the lorry charge and motor vehicle tax for delivery vans.
- Discussions with the opposition on medical-ethical issues, migration, the nitrogen package and healthcare fraud.