Outline of VAT and excise 

Outline of VAT and excise

Back to outline Tax Plan

Dutch version

Abolition of reduced VAT rate on agricultural products

As part of the review of VAT reduced rates to simplify the tax system, the government proposes to abolish the reduced VAT rate on agricultural products from 1 January 2025. Under the current VAT legislation, supplies of certain agricultural products are taxed at a reduced rate, such as pulses and cereals not intended for human consumption, seedlings, livestock, beetroots, agricultural and horticultural seeds, roundwood, straw, fodder, flax and wool, both raw and non-washed. Now that the agricultural VAT regime has been abolished with effect from 1 January 2018 and agricultural entrepreneurs are no longer exempt from VAT, there is no longer a need to apply the reduced VAT rate to these agricultural products. Since agricultural entrepreneurs were not entitled to deduct input VAT, a reduced VAT rate on the products they purchased for their production resulted in a relatively lower input tax burden. This will end, for example, the difference in tax on guinea pig feed and rabbit feed. Also, from 1 January 2025 - through the Bill introducing other 2024 tax measures - the application of the reduced rate for animal rearing and plant breeding will be abolished. The proposed codification into law of what had been approved by decree will not go ahead.

Excise duty changes

The government wanted to increase excise duty rates on alcoholic beverages by applying the adjustment factor for inflation. This would result in an excise duty increase of 16.2% in total. However, by amendment the House of Representatives decided to practically cut this increase in half, as the competitive position of medium-sized shopkeepers in border regions was feared to be affected by large differences in excise duty rates compared to neighbouring countries. Budgetary cover for this was provided for through an increase of the gaming tax rate by 1 percentage point in 2024, to 30.5%.
What’s more, because of the fear in the House of Representatives for financial difficulties that many households could otherwise face, the temporary reduction in excise duty on petrol, diesel and LPG has been extended by one year, to 1 January 2025. For a litre of petrol this is about 21 cents and for a litre of diesel this is well over 13 cents. On the other hand, excise duty on diesel substitute fuel oil will be increased to reduce its use and create a level playing field. Tobacco excise duty will also be increased.