2022 Tax Plan – Outline of car taxes and environmental taxes measures

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2022 Tax Plan – Outline of car taxes and environmental taxes measures  

2022 Tax Plan - Budget Day (Prinsjesdag)

The following lists the measures proposed in the 2022 Tax Plan in respect of car taxes and environmental taxes.

2 November 2021

Outline of car taxes and environmental taxes measures

Dutch version

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Webcast Tax Plan 2022

Corina van Lindonk, Aart Nolten and Eddo Hageman discussed the most noticeable measures of Tax Plan 2022.

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Change of BPM bracket limits en rates

The taxable amount for the private motor vehicle and motorcycle tax (‘BPM’) depends on the CO2 emissions of private motor vehicles. The drop in CO2 emissions of conventional cars is expected to be an average of around 2.3% per year from 2022 through 2025, resulting in a simultaneous drop in income from the BPM. To prevent this, the CO2 bracket limits for private motor vehicles for the period 2022 through 2025 will be reduced by 2.3% each year and the bracket rates will be increased by 2.35%. These changes will likewise apply to the diesel surcharge.

Transitional provision for BPM rate change

Effective from 1 January 2022, the taxable event for levying BPM will be when a motor vehicle is registered in the vehicle registration system, rather than when the owner of the motor vehicle is registered . To this end, a transitional provision will be introduced to deal with rate changes in the period between a motor vehicle being registered in the vehicle register and the owner of the motor vehicle being registered. Under this provision, the historical rate will still apply if the owner of the motor vehicle is registered within two months after this rate change. If the owner is registered later on, the new BPM rate will be due. The legislator thus wants to create a level playing field between the domestic market and parallel imports from other EU Member States.

Clarification BPM – use on the road

Effective from 1 January 2022, under the Private Motor Vehicle and Motorcycle Tax Act 1992 (the ‘BPM Act’) the taxable event will be when motor vehicles are registered in the vehicle registration register. Since the purpose of the BPM Act is to tax motor vehicles which use, or will be using, the Dutch public road system, the registration of motor vehicles in the vehicle registration register is deemed to be aimed at the use of the Dutch public road system. In line with this, it has been proposed to include a provision in the Act according to which the BPM paid for a motor vehicle will be refunded if later on it appears that the roads will not be used. This may occur if the motor vehicle has been scrapped or exported before it has been used on the road. This regards codification of existing approval policy.

Energy tax reduction

The government will increase the fixed energy tax reduction by EUR 190.08 in 2022. In addition, the electricity rate in the first energy tax bracket will be reduced by EUR 0.06933 per kWh in 2022, to EUR 0.02135 per KWh. Both adjustments are of an incidental nature and are intended to compensate for the increased energy costs of households.

Rose of Postal Codes Scheme

The Rose of Postal Codes Scheme provides for a lower energy tax rate for members of a cooperative or owners’ association who jointly generate sustainable energy. The scheme was replaced by a subsidy scheme on 1 April 2021, which likewise aims to stimulate the local generation of sustainable energy. Although the tax benefit of the former scheme will continue to apply for existing cases for a period of fifteen years, it creates the problem of new members of a cooperative not having this tax benefit. This would have a negative effect on the investments made and to avoid this from happening it has been arranged for successors of departing members to receive the same tax benefits.

Reduced onshore power rate

The Tax Plan 2021 provides for a reduced energy tax rate for the use of onshore power and for not charging a surcharge for sustainable energy and climate transition in respect of electricity supplied to an onshore power installation. Onshore power comes from the onshore distribution grid and is supplied to moored ships. Using onshore power is more environmentally friendly than ships generating electricity with their own generators. A broadening of the definition of an onshore power installation is now proposed, according to which onshore power installations without an independent connection to the distribution grid can benefit from the tax breaks, too, from now on. Previously, such installations were excluded from the scheme because without an independent connection it could not be determined whether the power was actually used for ships. Special measuring equipment has now become available with which it is possible to register this. An onshore power installation with such measuring equipment may apply the rate reduction from now on, in so far as the electricity is supplied to ships.

Avoidance of double taxation for power storage

The energy tax is based on the principle that the consumer pays. With power storage though, energy tax may sometimes be levied twice, because both the supply to the power storage and the final supply to the consumer are taxed. Existing exceptions do not always apply to this. It is proposed to avoid this double taxation by exempting the supply to the power storage. The operator of the power storage facility will still pay for its own consumption, but not for storing the power.

Clarification of zero rate and natural gas exemption

In avoiding double taxation of energy an energy tax exemption applies for natural gas not used as fuel or used as an additive or filler in natural gas substitutes. The possible concurrence of this exemption with the zero rate for products designated as natural gas that are used as fuel in the facility in which they originate and the same possible concurrence with the refinery exemption, may create situations in which no energy tax is levied at all, resulting in possible tax leakage.

The government aims to clarify the energy tax through the proposed legislative amendment, thus preventing any tax leakage. The proposal provides for declaring the exemption not applicable if the products designated as natural gas are used in the facility from which they originate and the zero rate applies to that use. Similarly, it is proposed to declare that the exemption does not apply if the products designated as natural gas are consumed in the facility from which they originate and the refinery exemption excludes such consumption from the energy tax base.

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