The tax plans for 2023

What key tax proposals did Finance Minister Kaag unveil from her briefcase on Prinsjesdag 2022? We’ve listed the ten most important ones for you.

1. Minimum wage increase of over 10%

The minimum wage will be increased by just over 10% in a single step with effect from 1 January 2023. As the state pension (AOW) and social security benefits are also linked to this, they will rise proportionally.

2. Increase in the discretionary allowance under the work-related expenses scheme

Under the work-related expenses scheme, you, as an employer, can reimburse and provide your staff with various benefits on a tax-free basis. The discretionary allowance under the work-related expenses scheme will be increased from 1.7% of the total wage bill of €400,000 in 2022 to 1.92% for a total payroll of €400,000 in 2023. For the total payroll above €400,000, the discretionary allowance is 1.18%. If you exceed the discretionary allowance, you will pay 80% tax via the final levy in your payroll administration. 

3. Higher standard wage

As a director and major shareholder, you are obliged to pay yourself a market-rate salary and to include this in your private limited company’s payroll records. By law, the market-rate salary for 2022 must be set at no less than 75% of the salary paid in the most comparable employment relationship. Or on the highest salary of the employees working for your private limited company, if either of these amounts exceeds €48,000. As this salary is difficult to determine, an efficiency margin of 25% applies. This efficiency margin is now being abolished with effect from 2023. As a director and major shareholder, you may therefore need to award yourself a higher salary from 2023 onwards.

4. Corporate tax rates to rise

Corporation tax rates are set to rise and the tax brackets are set to narrow. From 1 January 2023, the rate will be 19% on taxable profits up to €200,000 and 25.8% above that amount. As a result, profits will be taxed at the highest rate of 25.8% sooner. The reason for the increase is to raise more tax from profitable companies in order to reduce the tax burden on citizens and boost purchasing power.

5. Income tax rates down and tax credits up

The rate in the first tax bracket will be reduced slightly: from 37,07% (2022) to 36,93% (2023). The first tax bracket will also be extended to €73,071 (€69,398 in 2022). Tax credits will be increased.

The working tax credit will also increase from 1 January 2023 as part of measures to boost purchasing power.

6. Two thresholds for substantial interest

Do you hold more than 5% of the shares, profit-sharing certificates or voting rights in a company? If so, you are a significant shareholder. The income you receive from this holding, such as dividends, is taxed under box 2 of the income tax system. The rate is currently 26.9%.

The Government plans to introduce two tax brackets in Box 2 with effect from 2024: 24.5% up to €67,000 and 31% for amounts above that threshold.  
In 2023, the rate for Box 2 will remain the same as in 2022, namely 26.9%.

7. Box 3 tax rate increased in stages

The rate in Box 3 will be increased in stages. In 2023, the rate will be 32% (currently 31%). In 2024 and 2025, the rate for Box 3 will rise by 1%, to 33% and 34% respectively.  

To protect small savers, the tax-free allowance will be increased from €50,650 to €57,000 with effect from 2023. 

Finally, as a result of the Supreme Court’s ‘Kerstar’ judgement and the resulting need to restore legal certainty, the tax base in box 3 is being adjusted. In doing so, the Tax and Customs Administration will base its calculations on the actual distribution of your assets across three asset groups:  

• Bank balances
• Other assets (including investments and property)
• Debts

8. Increase in stamp duty for businesses and investors

The transfer tax on property that does not qualify as a principal residence (in short, investment property) is rising from 8% to 10.4%. On balance, this means that companies, investors, and buyers or landlords of holiday homes will pay more transfer tax as a result.

9. Increase in the vacancy rate

The vacancy value ratio is one of the rent-dependent factors used to calculate the value of a property that is fully or partially let, where the tenant is subject to rent control. This will be increased with effect from 1 January 2023. As a result, the value of a let property in box 3 will increase, meaning the landlord will have to pay more tax in box 3. In addition, this change will have an impact on gift and inheritance tax.

In addition, there are two further changes:

1. With effect from 1 January 2023, fixed-term tenancy agreements will be excluded from the scope of the vacancy rate.
2. In the event of letting to related parties (such as a son or daughter), the option to apply the vacancy value ratio no longer applies.

Please note! The vacancy rate does not apply to holiday homes and non-residential properties.

10. Phasing out and abolition of the ‘jubelton’ tax relief for owner-occupied homes

The gift tax exemption for the purchase of a home, also known as the ‘jubelton’, will be completely abolished with effect from 1 January 2024. The ‘jubelton’ currently (2022) amounts to €106,671, which applies to recipients aged between 18 and 40. In the run-up to its abolition in 2024, the allowance will be reduced to €28,947 from 2023.

An energy support package for businesses?

For households, in addition to this purchasing power package, the government is announcing a price cap on electricity and/or gas up to a certain level of consumption. In addition, Minister Adriaansens of Economic Affairs and Climate Policy has announced that a support package for businesses will be introduced around November. It is not yet clear what form these plans will take. 

SRA