News item | 19-09-2023 | 3:30 PM
Today, State Secretary Van Rij of Finance (Tax and Tax Authorities) presented the Tax Plan 2024 package to the House of Representatives. The package contains necessary measures for society and the tax system. Consider supporting purchasing power and combating poverty, improving and simplifying the tax system and measures to achieve the set climate goals. The additional expenditure will be partly paid from windfalls in 2024, but also through other measures to maintain tax revenues.
Purchasing power and poverty reduction
The government wants to prevent people with a low income from getting into trouble. That is why the government is structurally allocating 2 billion euros to support people with a tight budget. One of the ways to do this through taxes is to increase the employment tax credit by 115 euros. The halving of the young disabled person’s tax credit will also be canceled and the phasing out of the double general tax credit for people on social assistance will be frozen in 2024. With these measures, people around the minimum income will have more net income per month.
The government has also made the choice not to fully index the starting point for the top rate of income tax, the second and third brackets for pensioners with the inflation increase, but with 3.55%. People with a higher income will therefore pay slightly more income tax. Yet they will also improve in purchasing power next year. The 1.6 billion euros raised by this measure can be used to pay compensation for lower incomes.
The government also increases the tax-free travel allowance from 21 to 23 cents per kilometer and makes it easier for employers to provide public transport subscriptions to employees. The exemption for public transport season tickets and discount hour cards is therefore being expanded and no tax is due if the employee uses the public transport card for business travel.
Box 3 and Pillar 2
Financial setbacks are expected in the estimated yield of the global minimum profit tax for multinationals of 15% (Pillar 2) and the postponement of the new box 3 system from 2026 to 2027. It is therefore necessary to take a number of additional measures. In this way, public finances remain healthy and burdens are not passed on to future generations.
For example, it has been decided to reduce the SME profit exemption from 14% to 12.7%. Due to this exemption, (IB) entrepreneurs now have a lower tax burden than employees. By reducing the percentage, we reduce the difference in tax treatment of employees and entrepreneurs in income tax. Particularly entrepreneurs with a higher income therefore pay tax on a larger part of their profit or income. The cabinet has also decided to increase excise duties on cigarettes and rolling tobacco. As a result, from April 1, 2024, a pack of cigarettes (20 pieces) will cost an average of €10.70 and a pack of rolling tobacco (50 grams) will cost €24.14 including VAT. The excise duties on alcohol are indexed once. With both measures, the government wants – in addition to generating additional income – to encourage a healthy lifestyle and discourage unhealthy choices.
Due to the postponement of the new box 3 system, the income from box 3 will be lower. To compensate for this, it has been decided not to index the tax-free allowance on a one-off basis in 2024. This remains €57,000. Normally the tax-free allowance is indexed annually based on inflation. In addition, the tax in box 3 will be increased by an extra percentage point a year earlier in 2024, from 32% to 34%.
Tax constructions and tax arrangements
In order to make the tax system more balanced and simpler, the government has agreed in the coalition agreement to tackle tax constructions and to reduce or abolish tax schemes that have been negatively evaluated. In line with this, the government wants to maintain the business succession scheme (BOR) and the substantial interest transfer scheme (DSR ab), but in an adapted form because they prevent the survival of a company from being jeopardized in the event of a business transfer because gift or inheritance tax must be paid. paid. The government is taking a total of six measures to make the scheme more robust and simpler in the coming years.
The special arrangements for motor vehicle tax and the reduced VAT rate have also recently been evaluated. First steps are being taken by abolishing a number of schemes in this Tax Plan because they are not or only to a limited extent effective and efficient. Four regulations in motor vehicle tax will be abolished and two will be simplified. RV owners now pay only a quarter of the taxes that passenger car owners pay. The government wants to pay half for campers in the future; partly because campers emit relatively more CO compared to passenger cars2 expel. In addition, it is possible to temporarily suspend a camper, which in practice often means that even less road tax has to be paid. The classic car scheme will also be adjusted as of 2028, so that only motor vehicles built before 1988 are still eligible for the scheme. For the time being, one reduced VAT rate is being abolished: the reduced VAT rate for input goods in the agricultural sector. The purpose of the scheme expired in 2018.
climate
Last spring, the government announced a number of fiscal greening measures with the climate package. Given the climate challenge we face as a society, we cannot afford to stand still due to the climate agreements made. That is why the government now wants to introduce a number of measures. This concerns agreements that arise from the greenhouse horticulture agreement, including the CO2levy for greenhouse horticulture as of 2025 and the abolition of the reduced energy tax rates for greenhouse horticulture. The minimum CO2-price for the electricity sector and industry will increase from 2024 to 51.70 euros per tonne of CO2. The energy and coal tax exemptions for producers of iron and building materials will also be abolished.
To accelerate the adoption of emission-free passenger cars and subsidize the purchase of second-hand electric cars, the fixed rate of car purchase tax will be increased by 200 euros as of 2025.
The government encourages sustainable investments by entrepreneurs and therefore makes more money available for the energy investment deduction, environmental investment deduction and Research and Development Promotion Act.
Caribbean Netherlands 2024
Part of the Tax Plan 2024 package is also the Tax Plan for the BES islands. This continues the revisions of the BES Tax Act, the BES Income Tax Act and the BES Wage Tax Act, which have already started in 2023. These laws have hardly been amended since the islands became special municipalities (public bodies) within the Kingdom on October 10, 2010. For example, the usual salary for director-majority shareholders will be adjusted. In addition, the turnover limit in the general expenditure tax – the VAT on the BES islands – for the small business scheme will be increased to $30,000 per year. An additional 30 million euros per year will be structurally available to improve purchasing power in the Caribbean Netherlands.