Outline of car taxes and environmental taxes

Outline of car taxes and environmental taxes

Back to outline Tax Plan

Dutch version

Motor vehicle tax changes

The government proposes to end both the zero rate of motor vehicle tax for public transport buses running on autogas and the lower rate of motor vehicle tax (‘MVT’) for LPG, CNG and LNG. Other than at the time when these schemes were introduced, these vehicles are no longer considered a sustainable alternative to petrol and diesel. Tax incentives for driving on such fuels are therefore no longer desirable.

The abolition of the reduced MVT rate will come into effect by 1 January 2026, while 1 January 2030 is proposed for the abolition of the exemption for buses. Other proposed amendments to the Motor Vehicle Tax Act include:

• Cutting back on MVT rates for campervans;
  
• Cutting back on the classic car scheme under the MVT;
• Termination of the MVT quarter rate for horse transport; and
• Additional tax assessment for foreign residents.

Changes to taxation of passenger cars and motorcycles

Increase of fixed base of the private motor vehicle and motorcycle tax (‘BPM’)
The BPM is a tax on the purchase of a car. The BPM on passenger cars includes a fixed part and a variable part. The variable part depends on the car’s CO2 emissions. As already announced in the 2023 Spring Memorandum, the government wants to accelerate the purchase of emission-free cars and subsidise the purchase of second-hand electric cars. To cover this in budgetary terms, it is proposed to increase the fixed base of the BPM by EUR 200, effective from 2025.

Termination of refund of BPM in respect of money transport
The Private Motor Vehicle and Motorcycle tax Act includes a BPM refund scheme for money transport vehicles. Within the broader context of climate and environmental goals, it is now proposed to end this refund scheme. This should also result in a simplification of the tax system (administrative and otherwise).

Flight tax changes

The definition of an aircraft for application of the air passenger tax will be tightened in that the required take-off weight will be reduced from 8,616 kilograms to 4,000 kilograms. This increases the group of aircraft covered by the scope of this tax.

Energy tax changes

Split of first energy tax bracket

Following the adopted amendment by MP Grinwis et al. to the 2023 Tax Plan, the 2024 Tax Plan will split the first energy tax bracket for both electricity and gas. Both the old and new bracket classifications are shown below.

The new classification of these tax brackets for electricity is in line with the price cap limit of 2,900 kWh. Remarkably, a lower limit has been chosen for the first energy tax bracket for gas than the price cap and then previously proposed: 1,000 m3 instead of 1,200 m3. This choice was made to further encourage measures to improve sustainability. It should be noted that no differentiation in the rate between the first two brackets is proposed for the time being. This measure is mainly intended to make it easier to support households in the future by reducing the energy tax in the first bracket.
 

Rates and energy tax deduction
In 2024, the fixed energy tax deduction will be increased by EUR 23.40 to EUR 521.81 (excluding turnover tax). Budgetary cover for this measure will be provided for by slightly reducing the inflation correction factor.

Phasing out reduced rate for greenhouse horticulture

Until now, the greenhouse horticulture sector in the Netherlands has enjoyed a reduced energy tax rate for the natural gas they consume. This benefit adds up to over EUR 0.40 per m3 of natural gas consumed in the first bracket (2023). The Bill on climate-related tax measures for greenhouse horticulture proposes phasing out this reduced rate from 2025. While the government had envisaged a five-year phase-out period for this, the House of Representatives extended it to 10 years, so that the rate for the greenhouse horticulture sector will not be equal to the regular energy tax rate for natural gas consumption until 2035. This measure is expected to further stimulate the energy transition in greenhouse horticulture and to create budgetary revenues.

CO2 tax on greenhouse horticulture
A CO2 tax on greenhouse horticulture will be introduced from 2025. This tax is the successor to the current cost equalisation system. The tax base is based on CO2 emissions in greenhouse horticulture.

Abolition of input exemption for CHP and tax on own consumption

The energy tax currently includes an exemption for the use of natural gas and electricity used to generate electricity (the input exemption). This input exemption applies to plants whose capacity exceeds 60 kW and thus applies to companies and institutions in various sectors. In the past, these benefits were considered justified because gas-fired CHP plants produce heat and electricity relatively efficiently. Compared to other forms of heat and electricity production, the use of CHP plants reduced CO2 emissions on balance. Meanwhile, natural gas-fired CHP plants also compete with more sustainable alternatives. In terms of taxation, these sustainable technologies lag behind CHP plants.

Currently, natural gas used in these plants is fully exempt if they achieve an electrical efficiency of at least 30%. The government proposes to drop this efficiency requirement and gradually phase out the exemption in the period up to 2030. This measure will be assessed every year.

In addition, the output exemption for electricity will be abolished effective from 1 January 2025. So if an operator operates a CHP plant to generate electricity and subsequently uses this itself, it will also be subject to energy tax. As a result, a similar tax rate will henceforth apply to end-users for electricity they purchase from the public grid and electricity they generate themselves.

Alignment of tax treatment of smaller and larger installations
Following a memorandum of amendment, the input exemption for natural gas consumed to generate electricity for own use in smaller installations (<20 MW) is increased. This removes the tax incentive to first supply produced electricity to the grid and then purchase electricity from the grid. This will also create a level playing field between smaller and larger installations.