Tax aspects of the coalition agreement | Deloitte Nederland

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Tax aspects of the coalition agreement

On 15 December 2021, political parties VVD, D66, CDA and ChristenUnie presented the coalition agreement ‘Looking after each other, looking ahead to the future’. In this alert we discuss the tax aspects of this agreement.

20 December 2021

On 15 December 2021, the political parties VVD, D66, CDA and ChristenUnie presented the coalition agreement ‘Looking after each other, looking ahead to the future’ (‘Omzien naar elkaar, vooruitkijken naar de toekomst’). The agreement contains the government’s main policy intentions for the coming years. In terms of taxation the following points stand out.

Businesses and entrepreneurs

  • The coalition parties adopt the Ter Haar Committee’s recommendation to tighten the CFC measure for corporate income tax purposes. What’s more, the OECD proposals on a global minimum level of profit tax (‘Pillar II’) will be introduced. These measures intend to generate budgetary revenues of around EUR 1 billion. Failing this, other measures will be considered, such as increasing the low rate (15%), or cutting the length of the first bracket.
  • As from 2023, the budgets for the energy investment credit (‘EIA’) and the environmental investment credit (‘MIA’) will be structurally increased by EUR 50 million and EUR 30 million, respectively.
  • The self-employed deduction for entrepreneurs will be reduced to EUR 1,200 in 2030, to reduce the difference in taxation between entrepreneurs and employees. Hence, the reduction already introduced will be accelerated and continued in annual steps of EUR 650.
  • The bill on excessive borrowing from one’s own company will be amended, in that the maximum amount will be increased to EUR 700,000 - up from EUR 500,000. By legal fiction, any excess amount will be taxed as a regular benefit in box 2.
  • The business succession facility in income tax and the gift and inheritance tax will be evaluated in 2022. While the coalition agreement stresses the importance of the scheme for the continuity of businesses, improvements to the facility and actions to prevent improper use will need to be considered.

Housing market and wealth

  • The landlord levy will be abolished as of 2023, in exchange for binding performance agreements with housing corporations. The aim is to use the investment capacity thus created for the construction of flexible housing, affordable rented houses, renovation, sustainability and neighbourhood liveability.
  • The general transfer tax rate will be increased from 8% to 9% in 2023. This rate applies to non residential properties and to residential properties that are not the primary residence of the acquirer.
  • For income from savings and investments in box 3, a levy based on actual returns will be introduced in 2025. For the time being, the increase in value of real estate will still be taxed at a flat rate. The value with vacant possession ratio for rented houses in box 3 will be abolished in 2023. The resulting proceeds will be used to increase the tax-free allowance to approximately EUR 80,000.
  • The exemption of over EUR 100,000 for gifts related to the acquisition, improvement, or maintenance of an owner-occupied residence will be abolished in 2024.

Income policy and employees

  • Low and middle income earners, workers and families in particular will benefit from a EUR 3 billion reduction in tax and social insurance contributions. The details of this reduction are still unclear.
  • By introducing a minimum age limit based on the year of birth as of 2025, the income-related combination tax credit (inkomensafhankelijke combinatiekorting, or ‘IACK’) will be phased out. It will thus no longer be possible to claim the tax credit for children born after 2024.
  • The income tax averaging scheme will be abolished in 2023.
  • The untaxed travel allowance (currently EUR 0.19 per kilometre) will be increased effective from 1 January 2024. To this end, EUR 400 million has been reserved.

Transport

  • In 2030, a ‘pay-as-you-go system’ will be introduced for all car use. The legislation required for this will be enacted during this government’s term of office. The system will be based on motor vehicle tax, the rate of which will depend on the annual number of kilometres driven. Hence, users of electric and fossil cars alike will share in the costs of road use.
  • The exemption from private motor vehicle and motorcycle tax (‘BPM’) for entrepreneurs’ delivery vans will be phased out in three annual steps effective from 1 January 2024, resulting in its abolition in 2026. The exemption for emission-free delivery vans will continue to exist.
  • Flight tax will be raised in 2023, increasing the related revenues by EUR 400 million.

Environmental taxes

  • The rate of the first energy tax band will be increased for gas in the period 2023-2028, while the rate for electricity will be reduced substantially in the same period.
  • By increasing the rate in the higher tax bands for the consumption of gas and electricity, the band structure for energy tax will become less degressive.
  • The rate of the Surcharge for Sustainable Energy (Opslag voor Duurzame Energie, or ‘ODE’) in the second and third rate bands for electricity will be reduced from 2023 onwards.
  • To compensate households for the expected increase in supply tariffs due to the mandatory blending of green gas, the fixed energy tax reduction will be increased as of 2023.
  • The exemption from energy tax for mineralogical and metallurgical processes will be abolished effective from 1 January 2025. The same applies to the reduced energy tax and ODE rate for greenhouse horticulture businesses.
  • In respect of cogeneration systems, effective from 1 January 2025 the energy tax input exemption for the use of natural gas in electricity generation will be limited to the natural gas used for the electricity generated and supplied to the grid.
  • By adjusting the number of dispensation rights and the rate, the CO2 tax for the industry sector will be tightened. In addition, an increasing minimum price will be introduced in this tax on 1 January 2023, creating a floor for the (to be expected) price per tonne of CO2 in the European trading system EU ETS.

VAT and excise duty

  • In line with the National Prevention Agreement (Nationaal Preventieakkoord, or ‘NPA’), in two successive steps the tobacco excise duty will be increased to about EUR 10 per pack as from 2023.
  • The consumption tax on non-alcoholic beverages will be tightened. The possibility of introducing a sugar tax and lowering the VAT rate on fruit and vegetables to 0% will likewise be examined.


Source: https://www.kabinetsformatie2021.nl/documenten/publicaties/2021/12/15/budgettaire-bijlage-coalition agreement-2021-2025

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