House of Representatives adopts 2024 Tax Plan package

Dutch version

Back to outline Tax Plan

Introduction

On 26 October 2023, the House of Representatives adopted all the bills included in the 2024 Tax Plan package:

• 2024 Tax Plan
• Tax Plan for the BES Islands
• Other 2024 tax measures
• Climate-related tax measures for greenhouse horticulture
• Climate-related tax measures for electricity and industry
• Amendment of mutual funds and exempt investment institutions
• Amendment of fiscal investment institutions
• Tax qualification policy of legal forms
• Compensation for income tax return pre-processing selection
• Revaluation of compensation of costs of WOZ and BPM legal proceedings
• 2024 amendment of business succession tax facilities
• Temporary rules on revision of income tax returns
• Reduction of personal contribution for housing benefit
• Not phasing out of double general tax credit in reference minimum wage
• Step-up of child-related budget in connection with purchasing power support

The House of Representatives adopted amendments to some of these bills, the most important of which are discussed below.

Corporate income tax, dividend withholding tax and bank tax

Deduction for gifts & excessive borrowing
The government had proposed to abolish the deduction for gifts in corporate income tax as of 1 January 2024, but an amendment adopted by the House of Representatives cancelled this abolition. As a result, gifts other than for business purposes will remain deductible up to a maximum of 50% of the profit capped at EUR 100,000. On the other hand, the ceiling for excessive borrowing by substantial interest holders (box 2) from their own companies will be reduced from EUR 700,000 to EUR 500,000. A notional profit distribution will be taken into account for any borrowings in excess of the above cap.

Dividend withholding tax share repurchase facility
The share repurchase facility for quoted companies provided for in dividend withholding tax will be abolished as of 1 January 2025. As a result, repurchase of own shares will henceforth be taxed as heavily as payment of dividends. The abolition of this facility will serve to cover various income support measures.

Increase in bank tax
The bank tax will be increased in 2024. The rate on the part of the taxable amount relating to short-term debt will be up from 0.044% to 0.058%, while the rate on the part of the taxable amount relating to long-term debt will be increased from 0.022% to 0.029%. This should generate EUR 150 million in tax revenues.

Wage and income tax

30% facility tightened
The 30% facility will be scaled back from 1 January 2024. Although the facility will remain applicable for a 60 month period in total, the percentage of the salary that can be designated as reimbursement for extraterritorial costs will only be 30% during the first 20 months of this period. This will be reduced to 20% for the following 20 months and subsequently to 10% for the last 20 months. A transitional arrangement will apply for employees who already received compensation to which the 30% facility applied in the last pay period of 2023. For these employees, the legislation in force until 31 December 2023 will continue to apply under certain conditions. We also refer to our alert on this topic.

Abolition of partial non-resident tax liability
The partial non-resident tax liability for expats will be abolished as of 1 January 2025. As a result, employees using the aforementioned 30% facility can no longer opt to be considered non-resident taxpayers for the purposes of box 2 and box 3 taxation. However, a transitional arrangement will apply for employees who already received compensation to which the 30% facility applied in the last pay period of 2023. Under certain conditions, they can continue to opt for the partial non-resident tax liability until the end of 2026 at the latest.

Box 2 and box 3 tax rate increase
The 2023 Tax Plan already provided for the introduction of a two-bracket system in box 2 as from 1 January 2024, with a basic rate of 24.5% up to a box 2 income of EUR 67,000 and 31% on the excess. However, the House of Representatives passed an amendment increasing the top rate in box 2 by 2 percentage points to 33% in 2024. A flat rate of 26.9% still applies in 2023.

The same amendment also provides for a 2 percentage points increase in the box 3 rate. The government had proposed to set the box 3 rate for 2024 at 34% (2023: 32%), but this will now be 36%. The tax-free assets remain EUR 57,000 in 2024 (for tax partners: EUR 114,000).

SME profit exemption
The government had proposed reducing the SME profit exemption for entrepreneurs from 14% to 12.7% in 2024. However, the House of Representatives believed this to be excessive and limited the reduction by amendment, bringing it to 13.31% in 2024.

Income-related combination tax credit
The abolition of the income-related combination tax credit (IRCTC) for parents with children born on or after 1 January 2025 envisaged in the Tax Plan 2023 will not take place. Instead, the IRCTC will be phased out in nine annual steps from 2027 for all target groups, including parents with children born or to be born until 31 December 2024. Because of the delay in introducing the new childcare system, the phasing-out process does not start until 2027.

Gift and inheritance tax

Relaxation of business succession scheme
The government had proposed to limit the exemption of business assets from 1 January 2025 to 100% of the going concern value of the business up to EUR 1.5 million and 70% on the excess. However, the latter percentage was increased to 75% by amendment. The dilution facility will also be relaxed, in that the minimum required indirect interest of 0.5% for application of the business succession scheme and the roll-over relief scheme will be abolished as from 1 January 2025. These measures are covered by a reduction in the exemption for green investments in box 3 to EUR 30,000 per taxpayer (or EUR 60,000 for tax partners).

Environmental taxes

Energy tax rates and exemptions
The fixed energy tax credit will be increased by EUR 23.40 to reach EUR 521.78 (ex VAT) in 2024. To provide coverage for this measure, the inflation correction factor will be slightly reduced. Under another amendment, the rate for electricity in the new first energy tax bracket (up to 2,900 kWh) will be reduced by EUR 0.00001 per kWh, in exchange for an increase in the so-called shore-side power rate.

The phasing-out period of the reduced energy tax rate for greenhouse horticulture has been extended. The government had proposed this phase-out to take place in five years, in the period 2025-2030, but the House of Representatives made it 10 years. This means that the reduced rate for greenhouse horticulture will not disappear completely until 2035.

Coal tax exemptions
The government had proposed to abolish the coal tax exemptions for dual use and non-energy use of coal by 2028. However, the House of Representatives has decided to bring this abolition forward by one year, which means that these exemptions will disappear as from 2027.

Aviation tax
The definition of aircraft will be tightened for air passenger tax purposes: the required take-off weight will be reduced from 8,616 kilograms to 4,000 kilograms. As a result, a larger group of aircraft will be subject to the tax.

Excise duty

Limit excise duty hike & increase gaming tax
The government wanted to increase excise duty rates on alcoholic beverages by applying adjustment factor for inflation. In total, this would have amounted to an excise duty hike of 16.2% However, the House of Representatives decided by amendment to practically halve this increase, as it was feared that the competitive position of shopkeepers in border regions would be badly affected by large differences in excise duty rates compared to neighbouring countries. To cover this, the gaming tax rate will be increased by 1 percentage point to 30.5% in 2024.

Furthermore, the temporary reduction in excise duty on petrol, diesel and LPG has been extended by one year to 1 January 2025. This involves reductions of 21 cents for a litre of petrol and 13 cents for a litre of diesel. The House of Representatives feared that many households would otherwise face financial difficulties.

Procedural tax law

Right to inspect tax files
Taxpayers will have a statutory right to inspect their own tax files. To this end, an exception to the statutory duty of secrecy is created. An order in council may lay down rules on the manner in which inspection is granted and the grounds for refusing inspection. The Tax Inspector will decide on a request for inspection through a decision that is open to appeal. This allows any related disputes to be brought before the Tax Court. The measure will enter into force on 31 December 2025 at the latest.

Limitation of reimbursement of costs of proceedings
The government wants to limit the compensation for costs of professional assistance provided by a third party and nonpecuniary damages incurred for non-compliance with time limits in BPM and WOZ legal proceedings, because of alleged overcompensation. Also, compensation awarded will only be paid to a bank account in the name of the interested party. With these measures, the legislator wants to remove the financial incentive to litigate for agents operating on a 'no cure no pay' basis and take away some of the pressure on the judiciary. The House of Representatives not only agreed to this bill, but also extended its scope to proceedings against fines imposed under the Traffic Regulations (Administrative Enforcement) Act (Wet administratiefrechtelijke handhaving verkeersvoorschriften).