What major tax proposals came out of outgoing Finance Minister Kaag's suitcase on Budget Day 2023? We list the 10 most important ones for you.
1. First step in tightening business succession regime (BOR) taken
The purpose of the business succession scheme (BOR) and the pass-through scheme (DSR) is to remove as much as possible the obstacles of a normal (high) tax burden in business succession. You can therefore pass the baton to the next generation with a tax incentive. As such, the BOR plays an important role in the transfer of family businesses. The BOR and its raison d'être have received a lot of attention and a tightening has therefore been announced.
From 1 January 2024, leased real estate will no longer fall under company assets, but under investment assets. Donating rented real estate with application of the BOR will then no longer be possible.
2. Two discs in box 2
From 1 January 2024, Box 2's uniform rate of 26.9% will be replaced by two rates. For dividends received up to €67,000, a rate of 24.5% will apply. For the amount above that, the rate will be 31%. Tax partners will benefit twice from the low bracket, meaning that, for example, a dividend payment of €134,000 will be taxed at the low rate of 24.5%.
With this measure, the government wants to encourage substantial interest holders to distribute profits more often (annually) and not continue to hoard profits in the PLC.
3. Reduce SME profit exemption
The SME profit exemption is a deduction from taxable profit in income tax. The percentage of the SME profit exemption for entrepreneurs will be reduced from 14 (2023) to 12.7 from 1 January 2024. As a result of this measure, entrepreneurs in income tax, such as sole traders, partnerships and self-employed persons, will pay more tax from 2024. Entrepreneurs with the highest profits will lose the most as a result of this adjustment.
4. Miscellaneous changes to box 3
For now, the aim is to tax actual returns in Box 3 from 2027. Until then, notional returns will remain the starting point. There are three categories: bank and savings, investments and debt.
From 2024, shares in owners‘ associations (vve's) will legally fall into the category of bank and savings. Do you own a flat? If so, you may pay less box 3 tax as a result. This ’requalification' also applies to monies in third-party accounts with the notary.
Another change is the increase in the green investment tax credit from 0.7% to 1.1% of the exempt amount.
The tax-free wealth in box 3 will not be adjusted for inflation. In addition, the rate in box 3 goes from 32% (2023) to 34% in 2024.
5. Miscellaneous changes box 1
Taxation on income from work and home will be increased in several ways:
- Income tax in Box 1 has two brackets. From 2024, the second bracket will be indexed less than inflation. The indexation will be 3.55% instead of 9.9%. For pensioners, income tax on pension income comprises three brackets. The second and third brackets are also indexed at 3.55% instead of 9.9%.
- The rate in the first tax bracket increases by 0.04% from 36.93% (2023) to 36.97% (2024).
- The labour tax credit will be increased by €115 for incomes around the legal minimum wage. Working people with salaries up to almost €40,000 will improve as a result.
6. Energy investment allowance (EIA) scaled back
As an entrepreneur, are you investing in energy-friendly business assets? Then it is possible to deduct a certain percentage of the investment amount directly from your profits via the energy investment allowance (EIA). Because this reduces the profit, you as an entrepreneur save tax. For the year 2023, the percentage is 45.5. This percentage will be reduced to 40 in 2024. In addition, the Energy List will be adjusted. The exact details will be determined in the fourth quarter of 2023.
7. Fewer untaxed allowances for staff
As an employer, the work-related costs scheme allows you to provide and reimburse your staff with all kinds of items untaxed. The free allowance in the work-related costs scheme was widened once in 2023 to 3%, up to a wage bill of €400,000. This widening will be limited in 2024 to 1.92% for wage bill up to €400,000 and 1.18% for the excess.
8. Purchasing (van) car becomes more expensive
Buying a new car will become more expensive in 2024. The fixed base of the bpm will go up by €200. The bpm is a tax payable when buying a new car or motorbike. Electric cars will still be exempt from bpm next year. In 2025, this exemption will be scrapped, so the purchase price of electric cars will be higher in 2025 compared to 2024.
In addition, from 1 January 2025, the bpm exemption for vans will expire.
9. Introduction of minimum hourly wage
The Netherlands has a statutory minimum wage. This minimum wage is set per month. From 2024, this will change and the minimum wage will be set per hour. With this, everyone aged 21 and above working for the minimum wage will receive the same hourly wage. A monthly, weekly or daily wage will not be allowed.
10. More reporting requirements
From 1 January 2024, a number of new reporting obligations will take effect. For instance, employers with more than 100 employees will be obliged to keep track of their staff's CO2 emissions. In addition, payment service providers will be obliged to share all payment dates of cross-border transactions with the tax authorities under certain conditions, with the aim of countering VAT fraud. Finally, digital platforms will have to report on their sellers for the first time.