News item | 18-12-2024 | 10:53
On December 17, the Senate approved the Tax Plan 2025 package. This means that various tax measures will change as of 2025. The government is taking these measures to improve the purchasing power of Dutch people, to strengthen the business climate and to ensure healthy public finances.
State Secretary Tjebbe van Oostenbruggen (Tax, Tax Authorities & Customs): “I am pleased that both Houses have approved the Tax Plan Package. This means that there will be tax relief for many Dutch people as of January 1. In addition, we ensure that the business climate improves in the coming years. Of course, the work doesn’t stop here.”
The Dutch have more left over
The government is committed to reducing tax burdens. To ensure that Dutch people have more left in their wallets in 2025, the 1st income tax bracket, which applies to income up to € 38,441 per year, will be reduced to 35.82%. The 2nd bracket for income between €38,441 and €76,817 per year will be 37.48%.
The work costs scheme (wkr) is being expanded so that employers can give higher tax-free allowances to their employees. The 1st bracket of free space will increase from 1.92% to 2% in 2025 and to 2.16% in 2027.
The government has extended the current excise duty reduction on petrol, diesel and LPG by 1 year. In addition, no inflation adjustment is applied to this excise duty. The excise duty per liter remains €0.79 for petrol, €0.52 for diesel and €0.19 for LPG, just as in 2023 and 2024.
The government will also ensure that by 2025 people will no longer have to make complicated calculations when deducting additional transport costs due to illness or disability in their tax return. A fixed amount of €0.23 per kilometer is deductible for visiting a doctor, hospital or pharmacy. Travel costs incurred by taxi or public transport, as well as parking, ferry and toll fees, remain deductible against actual costs incurred. People who have additional transport costs due to a serious illness or disability may also deduct a fixed amount of € 925. The fixed amounts mean it is no longer necessary to keep receipts for fuel or insurance, for example. This way we make it easier.
From January 1, 2025, a specific exemption will also be introduced in box 3. This concerns claims that affected residents of Groningen and Drenthe in the earthquake area can make to certain recovery or strengthening measures by the government. If the government pays for the work to the contractor, taxpayers do not have to declare this claim as assets in their income tax return. The exemption applies retroactively from July 1, 2023.
Reducing tax differences between workers
The government wants to reduce the tax differences between self-employed entrepreneurs and employed workers. According to a previous decision, the self-employed deduction will be further reduced from €3,750 to €2,470. In addition, from January 1, 2025, bogus self-employment will again be fully enforced. Organizations that hire self-employed people for work that they do not perform as a self-employed person can then receive additional payroll tax assessments retroactively to January 1, 2025. This ensures a better balance in the labor market.
The Dutch business climate is being strengthened
For large companies, the interest deduction limitation in corporate tax (corporate tax) will be relaxed. Companies can deduct more interest expenses from their taxable profits. Previously this was a maximum of 20%, this percentage is now increased to 24.5%. In addition, the previous reduction in the expat scheme to a 30-20-10% scheme will be implemented differently. Instead, from 2027, expats can receive a tax-free allowance of 27% of their salary for 5 years. The salary standard will also be increased from 2027.
Some cuts that affected entrepreneurs will be fully or partially reversed so that entrepreneurs pay less tax on their profits. The SME profit exemption will go from 13.31% to 12.7% and not to 12.03% as the previous government had proposed, and the high rate in box 2 will go back from 33% to 31%.
From January 1, entrepreneurs based in the Netherlands can obtain a VAT exemption with the EU-KOR for 1 or more EU countries where business is done. No VAT is charged to customers in other EU countries and no VAT is deducted.