There has already been extensive coverage in the press of the measures the Government intends to take as part of the previously announced tax reform. On Friday 19 June 2015, State Secretary for Finance Wiebes sent a letter to the House of Representatives outlining the measures that might be taken. These are the measures for which, according to an assessment by the Government, a workable majority is likely to be found in both the Senate and the House of Representatives.
A key objective of the tax reform is to (significantly) reduce the tax burden on labour. To this end, a number of measures are being taken in relation to tax rates and tax credits. These measures are intended to reduce the income tax payable by a household by an average of around €800 per year (which could rise to €2,000, depending on the measures ultimately implemented).
The capital gains tax (Box 3) is being reformed because the tax on a flat-rate return of 4% on savings accounts – which usually pay a much lower rate of interest – is perceived as unfair. Taxing the return actually received cannot be implemented in the short term. The Government is therefore introducing a system in which the return is determined periodically for each asset, based on the returns actually realised in the market. In other words: a different notional return is applied for the taxation of savings accounts than for returns on a securities portfolio or a property investment. The rate in box 3 remains unchanged: 30%.
There has already been a great deal of media coverage regarding the standardisation of the VAT rate. This measure means that all services currently subject to the reduced VAT rate (6%) will be moved to the standard rate (21%). Only foodstuffs will remain subject to the reduced rate (including foodstuffs served in the hospitality sector).
Incidentally, the revenue from this VAT measure is, however, channelled back in full.
The measures relating to car taxation are set out in a separate letter from Wiebes, the “Autobrief II”. That document has not yet been sent to the House of Representatives, but some details of the measures have already been disclosed in a press release. In addition to measures relating to the BPM and MRB, the additional tax liability under payroll and income tax will be capped at 4% for fully electric cars and 22% for all other cars. The press release does not specify what the transitional provisions will entail.