Tax Plan 2022 - Senate adopts Tax Plan 2022 package

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Senate adopts Tax Plan 2022 package

On 21 December 2021, the Senate adopted the Tax Plan 2022, as well as the bills on combating mismatches when applying the arm's length principle and withdrawing the job-related investment credit.

5 January 2022

Tax Plan 2022 package

The Senate approved the following tax bills on 21 December 2021:

  • Tax Plan 2022.
  • Other tax measures 2022.
  • Implementation of tax liability measure from Second EU Anti-Tax Avoidance Directive.
  • Lower rate and monthly adjustment of landlord levy reduction.
  • Combating mismatches in the application of the arm's length principle in corporate income tax.
  • Withdrawal of the job-related investment credit.


The first five bills entered into force on 1 January 2022. The job-related investment credit was withdrawn with retroactive effect to 1 January 2021 and the financial resources thus released have been used to reduce the contribution to the General Unemployment Fund in the period from 1 August 2021 through 31 December 2021.

A bill to allow employees to defer taxation on stock options until the moment of disposal of the shares acquired with them has been postponed. Though scheme was intended for start-ups and scale-ups, the Lower House feared that it would also be used by large companies. The government will now investigate whether the scheme can be better targeted without violating the applicable state aid rules.

Rates 2022

The following shows an overview of the most important rates and exemptions for the year 2022.

Corporate income tax rates

In 2022, the corporate income tax rate is 15% up to a taxable amount of €395,000 (2021: €245,000). The regular rate will be 25.8% (2021: 25%). The table below outlines the changes:

Year 2021 2022
Basic rate 15% (taxable amount up to  €245.000) 15% (taxable amount up to  €395.000)
Top rate 25% (taxable amount as from  €245.000) 25,8% (taxable amount as from  €395.000)

 

Withholding tax and dividend withholding tax

The rate of conditional withholding tax on interest and royalty payments will be 25.8% in 2022 (equal to the top rate of corporate income tax). The dividend withholding tax rate will remain unchanged at 15% in 2022.


Income tax rates

Rate box 1
The rates in box 1 (income from employment and home) for taxpayers who were born on or after 1 January 1946 and have not yet reached the state pension age will be as follows in 2022:

with a box 1 income of more than but no more than tax rate rate of national insurance contributions total
- €35.472 9,42% 27,65% 37,07%
€35.472 €69.398 37,07% - 37,07%
€69.398 - 49,50% - 49,50%

 

The rates in box 1 of the income tax for taxpayers born on or after 1 January 1946 who have reached the state pension age will be as follows in 2022:

with a box 1 income of more than but no more than tax rate rate of national insurance contributions total
- €35.472 9,42% 9,75% 19,17%
€35.472 €69.398 37,07% - 37,07%
€69.398 - 49,50% - 49,50%

 

The rates in box 1 of the income tax for taxpayers born before 1 January 1946 will be as follows in 2022:

with a box 1 income of more than but no more than tax rate rate of national insurance contributions total
- €36.409 9,42% 9,75% 19,17%
€36.409 €69.398 37,07% - 37,07%
€69.398 - 49,50% - 49,50%

 

The maximum rate for certain allowable deductions in Box 1, such as mortgage interest relief, entrepreneur's allowance, SME profit exemption, and personal allowance, will drop to 40% in 2022 (2021: 43%). The allowable deductions will remain in place, but when calculating the income tax due, a rate correction will be applied in some cases.


Rate box 2
The rate in box 2 (income from substantial interest) is 26.90% in 2022. This is the same as last year.


Rate box 3
As of 1 January 2022, the tax-free allowance will be increased to €50,650 per taxpayer. The rate in box 3 (income from savings and investments) remains 31%.


National insurance contributions

  • The contribution rates for national insurance schemes remain the same in 2022 and amount to 17.90% (AOW), 0.10% (ANW), and 9.65% (WLZ), respectively.
  • The income-related employer’s contribution rate under the Healthcare Insurance Act (ZVW) will be 6.75% in 2022. In 2022, persons subject to compulsory insurance who receive other income components will have to pay a 5.5% income-related ZVW contribution. The maximum contribution income is in both cases €59,706.
  • Large employers will have to pay the high contribution of 7.05% for the Invalidity Insurance Fund (Aof) in 2022. Small employers pay the low contribution, which has been set at 5.49% for 2022.
  • The low contribution rate for the General Unemployment Fund (Awf) is 2.70% in 2022 and is payable by employees with a permanent employment contract for an indefinite period. In other cases, the employer will owe the high Awf contribution of 7.70% in 2022.

 
Gift and inheritance tax rates and exemptions

The rate of gift and inheritance tax depends on the relationship to the person from whom a gift or inheritance is acquired. Acquisitions (gift or inheritance) by a partner or a child are subject to a rate of 10% up to €130,425, and 20% on the excess. Acquisitions by a grandchild, these rates are 18% and 36%. For other acquirers, the rates are 30% and 40%, respectively.

The regular exemption for gifts from parents to children amounts to €5,677 in 2022. However, if the child is between 18 and 40 years of age, the parents may make a one-off gift of €27,231 tax-free. If the gift is intended to pay for a costly study for the child, the one-off increased exemption may even amount to €56,724.

The one-off increased exemption for donations relating to one's own home will amount to €106,671 in 2022. This exemption is not limited to gifts from parents to children but is subject to the requirement that the donee must be between 18 and 40 years of age. For all one-off increased exemptions, the beneficiary must explicitly invoke this exemption in their gift tax return.

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