Effective from 1 January 2025, the tax legislation will be subject to the necessary amendments. For each tax area, the following overview lists the actions you could still take before 1 January 2025 or, alternatively, after 1 January 2025. The Senate is set to vote on the 2025 Tax Plan on 17 December 2024; most of the proposed measures will not be final until after a positive vote.

Exemption for debt relief income
Combined with maximisation of the annual offset of losses, the exemption for debt relief income may currently be disadvantageous, as the exemption is limited by existing losses. Where these existing losses occur, they may only be partially offset in a year, i.e., for 50% of the profits in a year to the extent that these profits exceed the EUR 1 million threshold. As a result, in situations where the exemption for debt relief income is applied, corporate income tax may still be due. To fix this disproportionate effect, the 2025 Tax Plan proposes to take into account maximisation of the annual offset of losses if the exemption for debt relief income is applied, so this will no longer occur. As this is set to start next year, it may be advisable to delay granting a debt relief to a Dutch taxpayer until 2025.

Keeping documentation about the intention to apply a repurchase option for a mutual fund
As a result of the Act on the adaptation of mutual funds and exempt investment institutions, the definition of a mutual fund (MF) will change effective from 1 January 2025. The consent requirement will be dropped and the new definition will more closely align with the terms ‘investment fund’ and ‘fund for collective investment in transferable securities’ under the Financial Supervision Act (Wet op het financieel toezicht, or Wft ). This is intended to better align the use of MFs with their original purposes and prevent improper use. As a result, entities currently considered transparent could potentially become independently liable for tax effective from 1 January 2025, as they will then meet the new criteria for an MF. Under the so-called ‘priority rule’, this may also apply, e.g., to partnerships or limited partnerships that also meet the new criteria for the MF.

However, the independent tax liability does not apply to funds that are considered repurchase funds, where the securities can only be sold to the fund itself.

If a fund intends to become a repurchase fund, it is crucial to take action before 1 January 2025. If the fund wants to avoid temporary independent tax liability, it must meet all the conditions for a repurchase fund by 31 December 2025. A transitional provision has been proposed, ensuring that a fund will be considered a repurchase fund effective from 1 January 2025, provided that the intention to restructure existed before 1 January 2025.

To be considered a repurchase fund and ensure that your fund maintains its current transparent status, you must ensure that:

• You can demonstrate that the intention to restructure into a repurchase fund already existed before 1 January 2025. You can do so through documentation, such as minutes or correspondence demonstrating this intention and dating from before 1 January 2025.
• All necessary adjustments to the fund agreements are completed in time for the repurchase obligation to be official by 31 December 2025.

In respect of the actions you can take regarding the Act on the tax qualification policy for legal forms, please refer to our separate alert.

Pillar 2 ensures that large companies (with a consolidated turnover of EUR 750 million in two of the previous four reporting years) are subject to a minimum tax rate of 15%, regardless of where they have a presence. In certain jurisdictions, the transition year for many companies will be the 2024 calendar year. Hence, for these jurisdictions, making the full Pillar 2 calculation may be required. As from the transition year, for a jurisdiction, the deferred tax assets (also those formed in a prior year) can be taken into account in calculating the effective tax rate. In determining the effective tax rate, the reversal of such a deferred tax asset, e.g., by the offsetting of a loss, is treated as a relevant tax expense. These pre-Pillar 2 deferred tax assets must be recognized or disclosed in the financial accounts of the relevant group entity in the transition year. This makes it important for groups to identify the deferred tax assets and to include these in the disclosure note, so their use can be safeguarded for the Pillar 2 calculation.

If the transitional Country-by-Country Report Safe Harbour (“CbCR SH”) rule is met for a given jurisdiction in a year, the full Pillar 2 calculation is not yet required for that jurisdiction in that year. The transitional rule can be met if in a given jurisdiction the income is limited or the effective tax rate is sufficient (based on a simplified calculation). The simplified calculation for the safe harbour rule largely uses data included in a groups Country-by-Country Report (“CbCR”). Specific local rules may apply in the country in which the CbCR is filed. One rule used in many countries is that if a data source or a reporting method is changed, this change and the reason for it must be disclosed. Pillar 2 groups are recommended to take account of the Pillar 2 implications of a possible choice to be made when preparing the CbCR. Also, whether one of the tests in the CbCR SH rule (the simplified effective tax rate test) is met for a jurisdiction depends on the taxation in that jurisdiction. Hence, the accrual or reversal of deferred tax assets or liabilities may have consequences for meeting this test. For example, the accrual of a deferred tax asset reduces the simplified effective tax rate. To avoid unforeseen surprises, Pillar 2 groups are advised to take account of such (tax) accounting issues as part of the year-end closing process.

Change of place of supply rules for VAT purposes, in respect of virtual supplies
Effective from 1 January 2025, the place of supply for cultural, artistic, sport, scientific, educational and entertainment supplies, if made virtually, will change. They will be taxed in the country where the customer resides or is established, rather than in the Member State where the supply is actually made, which is usually the Member State where the supplier of a service is established. These new regulations will apply to all EU Member States.

Virtual supplies made to private individuals are subject to the VAT rate of the Member State where such individuals are established. Suppliers of services may opt for a simplified procedure to file a VAT return and remit foreign VAT through a One-Stop-Shop system. Suppliers that wish to choose this option must register for it before 1 January 2025. If they do not choose this option, they must have a VAT registration in each country where VAT becomes due, including the corresponding local obligation to file a tax return.

If it involves virtual supplies made to another VAT entrepreneur, the new rules will only apply if it concerns providing access to these supplies for events. If so, VAT will be reverse charged to the customer.

Amendment of concurrence exemption for specific property companies
Effective from 1 January 2025, a legislative amendment will enter into force that will abolish the application of the concurrence exemption for transfer tax purposes in respect of acquisitions of shares in specific property companies. The concurrence exemption prevents VAT and transfer tax both being due on certain supplies of immovable property. When acquiring shares in a property company that holds new or existing immovable property, the concurrence exemption can only be applied if the underlying new or existing immovable property is fully or almost fully (at least 90%) used for supplies subject to VAT at the time of acquisition and for two years thereafter. If this is not the case and less than 90% of the immovable property is used for supplies subject to VAT during the said period, 4% transfer tax is due on the acquisition of a shareholding of one third or more in the property company.

The purpose of this legislative amendment is to reduce inequality between market participants who choose to transfer immovable property through a share transaction and those who opt for directly transferring the immovable property.

To still benefit from the concurrence exemption, it may be advisable for transfers affected by this amendment to have them take place in 2024.

Abolition of partial non-resident tax liability
Employees using the 30% facility may opt to be treated as partial non-resident taxpayers for the duration of the 30% facility. If they do so, they are treated as non-resident taxpayers for the purposes of box 2 (income from substantial interest) and box 3 (income from savings and investments). For the purposes of box 1 taxation they are nevertheless regarded as domestic taxpayers.

However, the aforementioned option for partial non-resident tax liability will be abolished on 1 January 2025. Transitional rules apply for employees who had already been using the 30% facility before 2024. This group of employees can continue to use the scheme for partial non-resident tax liability until 2026 at the latest.

Employees who started using the 30% facility in 2024, will basically see their worldwide income also included in the Dutch taxation for box 2 and box 3 as from 1 January 2025. It may be advisable to list the consequences of this amendment, so you know how this amendment will affect your tax position.

Box 2 rate
As from 2024, the box 2 rate consists of two brackets. Taxable income up to EUR 67,000 is taxed at a rate of 24.5% and any excess income at a rate of 33%. However, the rate in the second bracket will be reduced to 31% effective from 2025. Are you planning to distribute dividends soon? If you want to fully utilise the first tax bracket of 24.5% it may be advantageous to distribute (part of) the dividends in 2024. Alternatively, you may want to postpone the distribution of (part of) the dividends until 2025. You can then utilise the first tax bracket of 24.5% once again and in respect of the excess take advantage of the rate reduction in the second bracket to 31%.

Excessive Borrowing Act
Have you and your partner or a person associated with you borrowed more than EUR 500,000 from your company on 31 December 2024? Then the excess could lead to a notional regular benefit in box 2, over which you must pay tax at a rate of between 24.5%-33%. You can avoid or reduce this taxation by repaying (part of) the loan, which you will need to do before 31 December 2024. Subject to certain conditions, loans for one’s own home are exempt.

Gift deduction
Although the gift deduction for corporate income tax purposes and the gift deduction for private individuals for personal income tax purposes will continue to exist, the ‘giving from the company’ scheme will end on 1 January 2025. On the back of this scheme being terminated, the part of non‑business gifts to charities that exceeds the limit of the gift deduction for corporate income tax purposes (50% of the profit, capped at EUR 100,000) will be regarded as a taxable distribution to the shareholder. Effective from 1 January 2025, shareholders may thus have to pay personal income tax and dividend tax on this. However, the expenditure can subsequently be classified as a personal gift from the shareholder, so for personal income tax purposes the shareholder can still use the gift deduction. Please note, effective from 1 January 2025, the threshold of the periodic gift deduction for personal income tax purposes will be increased to EUR 1,500,000 - up from EUR 250,000.

If you are considering to donate assets from your business to a public benefit organisation (algemeen nut beogende instelling, or ‘ANBI’) as a non-business gift, it may be advisable to do so in 2024. On the other hand, it may be advisable to defer any personal periodic gifts in excess of EUR 250,000 until 2025.

Business succession facilities
See under ‘Gift and inheritance tax’.

Termination of enforcement moratorium on false self-employment
The regulations involving the hiring of self-employed persons are undergoing significant amendments. The Assessment of Employment Relationships (Deregulation) Act (Wet deregulering beoordeling arbeidsrelaties) was introduced several years ago, to provide clients and self-employed persons with more clarity on the (absence of an) employment relationship. Still, as this Act came with considerable ambiguity, confusion and complexity, the Tax Administration soon decided ‑ pending new legislation - to limit its enforcement actions in respect of self-employed persons (the enforcement moratorium). Specifically, if a reclassification to an employment is required, the Tax Administration only imposes obligations to correct in cases of ‘malice’. In other cases, the Tax Administration issues an instruction that must subsequently be followed for the future. Please note that this enforcement moratorium applies only to payroll taxes and not to employment law/regulations governing pensions. The enforcement moratorium expires on 1 January 2025. From then on, the Tax Administration will be more active in enforcing false self‑employment.

Here are four steps you can take, whether or not before year-end, to be prepared for the termination of the enforcement moratorium:

1. Make a list: Obtain insight into the self-employed persons currently being hired by you. How many people within your organisation are self-employed persons and what roles/functions do they have?
2. Assess: Assess whether existing forms of using self-employed persons comply with current and future regulations.
3. Adjust: Where necessary, adjust internal policy and decision-making processes and ensure that contracts align with actual relationships.
4. Monitor: Continue to monitor the developments and make sure your internal policies and processes remain up-to-date.

Business succession facilities
Effective from 1 January 2025, various amendments to the business succession scheme (bedrijfsopvolgingsregeling, or ‘BOR’) and the transfer facility for personal income tax purposes (doorschuifregeling IB, or ‘DSR IB’) will be implemented. These amendments may give reason to either transfer a company in 2024 or to wait until 2025 and to invoke the BOR or DSR IB. The following lists the most important amendments as of 1 January 2025.

• The scope of the BOR exemption will be changed effective from 1 January 2025. The 100% exemption will be widened and will apply to the company’s going concern value up to EUR 1.5 million (in 2024 this was up to around EUR 1.3 million). The exemption on the excess will be reduced to 75%, down from 83%. For smaller companies (with a going concern value of < EUR 1.5 million) this adjustment may be favourable, but for larger companies this adjustment may be unfavourable.
• The 5% efficiency margin in the BOR, in respect of which any invested equity capital present up to a maximum of 5% of the business assets still qualifies for the BOR, will be abolished effective from 1 January 2025.
• In respect of acquisitions taking place effective from 1 January 2025, the continuation period will be reduced to three years, down from five years. This will reduce the period in which the successor is bound by the requirements for continuation.
• Effective from 1 January 2025, the BOR and DSR IB will be restricted for operating assets that are used both for business and private purposes (free choice assets). Free choice assets listed on the company balance sheet only qualify as business assets for purposes of the BOR and DSR IB if they are actually used within the company. This scheme applies to individual assets with a minimum value of EUR 100,000 and a business use of less than 90% at the time of gift or inheritance. Operating assets whose business use exceeds 90% or whose value is lower, are fully regarded as business assets.
• The employment requirement governing the use of the DSR IB for substantial interest (SI) shares in the event of a gift will expire effective from 1 January 2025. Hence, to use the facility an acquirer no longer needs to be employed by the company for at least 36 months prior to the gift. Effective from 1 January 2025, instead of the employment requirement a minimum age will apply to a transfer based on a gift. To be able to use the BOR and DSR IB for SI shares, the person acquiring the company must be at least 21 years old at the time of the gift.

If your personal income tax return or your company’s corporate income tax return results in a tax amount payable, you are advised to beware of the interest on tax. The interest on tax rate for corporate income tax purposes is expected to be 9% in 2025 (2024: 10%). For personal income tax  purposes this will be 6.5% (2024: 7.5%). In this respect we note that in a recent judgement of 7 November 2024, the Court of the Northern Netherlands ruled that the interest on tax rate for corporate income tax purposes applicable effective from 1 January 2022 (8% at the time) violates the principle of proportionality. This alert will not discuss (the consequences of) this ruling in substance, as the focus here is on preventing interest on tax by paying on time.

Interest on tax is charged from six months after the end of the year (or financial year) until the date on which the payment period of the provisional or final assessment expires. However, if a request for (revision of) a provisional assessment is made within four months after the end of the year, no interest on tax is charged. This is subject to the Tax Administration granting the request. The same applies if a tax return is filed within four months (personal income tax) and five months (corporate income tax), respectively, after the end of the year (or financial year). Again, this is subject to the provisional or final assessment being assessed in accordance with the tax return.