Shortly after the agreement on the purchasing power measures was reached (31 August, 5.23 am), details of these measures were (partially?) leaked. We have taken the information below from press reports.
Restoring purchasing power
To support citizens’ purchasing power, the Government is spending nearly €17 billion. The minimum wage will be increased by 10% in a single step from January 2023 (instead of the planned increase – in stages – of 7.5%). Income tax will be reduced for 2023 by lowering the rate in the lowest tax bracket and increasing the working tax credit. The lower energy tax and the reduction in petrol and diesel excise duties, which came into force in 2022, will continue. The rent and healthcare allowances and the child-related budget will be increased with effect from 2023 (and as the first instalment will be paid out as early as December 2022, allowance recipients will have a little extra before Christmas).
Income tax
To finance this, a one-off additional expenditure of €11 billion will be made. The remainder of the expenditure is structural and will be funded by an increase in corporation tax on the taxable amount up to €200,000 from 15% to 19%. It is not clear whether the substantial interest rate (AB) will also be adjusted. The Government has previously indicated that this rate will be increased from 26.9% to 29.5%, on the understanding that the rate for income from a substantial interest up to €67,000 (per tax partner) will be reduced to 26%.
In addition, the measure to restore purchasing power will be funded by an increase in the rate at which income from savings and investments (Box 3) is taxed, from 31%% to 34% (this increase will be implemented in three stages). This rate increase is in addition to the change in the method of calculating income in Box 3 (which will in all likelihood be the flat-rate savings option).
Prinsjesdag
On Prinsjesdag (20 September 2022), we will find out whether the plans reported in the press are actually included in the draft legislation setting out the tax plans for 2023. Experience in recent years has shown that the information leaked (whether intentionally or not) is generally quite accurate.