Motion to partially reverse VAT rate increase
The government had proposed to abolish the reduced VAT rate of 9% on culture, media, sports and accommodation as of 1 January 2026, and replace it with the general VAT rate of 21%. However, the House of Representatives is against increasing the VAT rate on culture, media and sports and has requested the government to develop an alternative. Minister Heinen has indicated to be willing to replace the VAT increase on culture, media and sports in the Spring Memorandum, an update to Budget 2025, with an alternative that will likely have sufficient support in parliament. For now, the minister has not removed the increase from the 2025 Tax Plan because it would create a EUR 2.3 billion deficit in next year's budget. The House of Representatives would seem to agree, for that matter, to a general VAT rate of 21% on accommodation.

Earnings stripping
The anti-fragmentation measure for real estate entities proposed in the 2025 Tax Plan will not go ahead. The government thus wanted to prevent companies from being split up in order to benefit from the EUR 1 million threshold amount several times under the earnings stripping scheme. The House of Representatives sees too many objections, though. On the other hand, the intended increase in the maximum interest deduction will be limited to 24.5% of adjusted profits, instead of the 25% as proposed earlier.

Motion on qualification policy, MF and EII
On 1 January 2025, the Act on the tax qualification policy for legal forms and the Act on the adaptation of mutual funds and exempt investment institutions will enter into effect. Although nothing will change in this respect, a transitional provision has been added by memorandum of amendment. Still, a motion adopted by the House of Representatives signals that this has not alleviated the concerns of pension funds and other asset managers about the impact of these acts. This is why the government is called upon to consult with stakeholders to see if any bottlenecks can be resolved and inform the House of Representatives about this by 1 July 2025.

Deduction for gifts CIT & IT
The government had proposed to abolish the deduction for gifts in corporate income tax as of 1 January 2025. Nevertheless, once again following an amendment adopted by the House of Representatives, there will not be such abolition. What’s more, the maximum deduction for periodic gifts in income tax will be increased from EUR 250,000 to EUR 1,500,000.

Transferability of general tax credit
Effective from 2028, the 2025 Tax Plan reintroduces a limited possibility to transfer the general tax credit. By amendment, the scope of the scheme has been widened by also allowing working single earners access to the scheme. Likewise, when calculating the general tax credit payable to the lowest-earning partner, the employment tax credit to which the other partner is entitled is not deducted. Budgetary coverage is provided by limiting the indexation for the 2028 calendar year.

Increase of discretionary margin of the work-related expenses scheme
In 2024, the discretionary margin in the work-related expenses scheme will be 1.92% up to a wage bill of EUR 400,000 and 1.18% on the excess. The House of Representatives adopted an amendment, though, which increases the percentage in the first bracket (up to a wage bill of EUR 400,000) from 1.92% to 2% effective from 1 January 2025 and then to 2.16% effective from 2027. This will be offset by a reduction of the exemption for green investments in box 3, to EUR 26,000 (EUR 52,000 for tax partners) effective from 2025, while the tax credit for green investments will be 0.1%, down from 0.7%. In 2027, both the exemption and the tax credit will expire altogether.

Increase in budget under the R&D Act
By amendment, the House of Representatives increased the budget under the Research and Development (Promotion) Act (Wet bevordering speur- en ontwikkelingswerk, or 'WBSO') by around EUR 100 million. This is implemented by increasing the percentage in the first bracket of the R&D remittance reduction to 36%, up from 32%. For starters, this percentage will even be increased to 50%, up from 40%. The first bracket will also be extended to EUR 380,000 (2024: EUR 350,000). As far as the base is higher, the remittance reduction percentage will remain at 16%. Financial coverage has been found in a 0.04% increase in the contribution for the Invalidity Insurance Fund (Arbeidsongeschiktheidsfonds, or ‘Aof’).

Relaxations for the business succession scheme
A relaxation of the so-called dilution scheme was adopted last year, eliminating the minimum required indirect interest of 0.5% for application of the business succession scheme and the transfer scheme. Possible state aid aspects have prompted the government to propose to have these measures take effect on a date to be determined by Royal Decree. The House of Representatives has now adopted an amendment linking this effective date to that of the proposed change in the business succession scheme (‘BOR’, or bedrijfsopvolginsregeling) and the transfer scheme for income tax purposes (‘DSR ab’, or doorschuifregeling). This change restricts access to these schemes to ordinary shares representing at least 5% of the issued capital.

Hydrogen energy tax rate
Effective from 1 January 2026, a separate rate for hydrogen will be introduced in the energy tax. This rate will equal the rate for business electricity consumption from 10,000,000 kWh upwards. As yet, it is still linked to the higher rate for natural gas. The government did propose to evaluate this reduced rate in 2030. However, following an amendment this so-called sunset clause was removed from the bill. To promote investment security the House of Representatives urges the government to set tariffs for the years after 2030 as soon as possible.

LPG rebate scheme
The 2024 Tax Plan provided for the abolition of the so-called LPG-G3 scheme in motor vehicle tax. This would have abolished the lower rate for LPG-equipped vehicles effective from 1 January 2026. However, the House of Representatives adopted an amendment reversing this measure. Budgetary cover has been found by reducing the budget for the environmental investment credit.

2025 Tax Plan - comprehensive summary

On 17 September 2024, the government submitted the 2025 Tax Plan package to the House of Representatives.