2023 Tax Plan – Outline of car taxes and environmental taxes measures

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2023 Tax Plan – Outline of car taxes and environmental taxes measures  

2023 Tax Plan - Budget Day (Prinsjesdag)

The following lists the measures proposed in the 2023 Tax Plan in respect of car taxes and environmental taxes.

29 November 2022

Outline of car taxes and environmental taxes measures

Back to outline 2023 Tax Plan

Dutch version

Energy tax changes

The high energy prices had initially urged the government to propose a number of incidental energy tax measures for 2023, such as a temporary energy tax reduction for natural gas and electricity and a higher tax relief. However, these measures have been reversed in favour of a price cap. Another measure concerns the postponement of coalition agreement measures intended to reduce natural gas consumption. Hence, instead of implementing the planned increase in the natural gas rate in the energy tax in 2023, this will not be implemented until 2024 and 2025.

Effective from 2024, a new first bracket will be introduced in the energy tax, for both natural gas and electricity. This bracket matches the price cap for small consumers (natural gas up to 1,200m3; electricity up to 2,900KwH). The other bracket limits will remain the same. The aim is to enable a more targeted compensation for this group. Another measure is the extension of the reduced energy tax rate for charging stations by two years, until 1 January 2025.

Finally, the tax relief to compensate for an expected bill for a green gas blending obligation will be increased. This bill will increase the cost of consuming natural gas, as green gas is more expensive than natural gas.

Webcast Tax Plan

Corina van Lindonk, Aart Nolten and Eddo Hageman discussed Tax Plan 2023.

View (in Dutch)

Cap on CO2 Price (for the Industry) Act

Since 1 January 2021, companies subject to tax that emit more greenhouse gases (CO2) than the emission space exempted for them (dispensation rights) will have to pay a tax imposed on the industry in respect of this excess CO2. Currently, for the emission space exempted in the Netherlands these companies only have to deal with the price of greenhouse gas emission rights within the European Emission Trading System (EU ETS).

Should emissions exceed the exempted emission allowance, this excess is subject to a tax. This applies if the price of greenhouse gas emission rights within EU ETS is lower than the national CO2 tax for the industry. The difference must then be paid through the tax return.

The 2023 Tax Plan proposes to adjust the CO2 tax so as to encourage the industry to reduce greenhouse gas emissions as much as possible. The reduction factor is used to determine how many dispensation rights a company receives. It is proposed to adjust the reduction factor of CO2 tax for the industry to 1.213 and subsequently reduce it by 0.078 every year.

A separate bill arranges for a minimum price to apply in the Netherlands for the exempted emission space, effectively setting a minimum price for companies subject to tax over the full greenhouse gas emissions. It involves a low(er) price for emissions for which companies have dispensation rights and the already existing, higher tax for emissions without dispensation rights. The aim is to allow the government to also set the level of the sustainability incentive for the emissions for which the company has dispensation rights and to increase companies’ investment certainty.

As the proposal sets the minimum CO2 price for the industry at the level of the minimum CO2 price for electricity generation, its level is relatively low compared to the EU ETS price. However, the EU ETS price is not expected to drop sharply, so a levy of the minimum CO2 price will not occur for the time being. Hence, the introduction of the minimum CO2 price for the industry is not expected to generate revenues.

As early as this year the minimum price path will be subject to an interim evaluation. The evaluation outcome may give rise to a proposal for a modified minimum price path, which would then become effective as of 2024. Likewise, the government will examine and reassess the level of the minimum CO2 price.

Amendment of Environmental Management Act

The Regulation (EU) of the European Parliament and the Council to establish a Carbon Border Adjustment Mechanism (CBAM), which is still to be adopted, will introduce a correction mechanism for the carbon price paid abroad on imports of certain goods at the external border of the European Union. The proposed regulation is part of the Fit-for-55 package and the European Commission published it on 14 July 2021. It fulfils the legally binding European greenhouse gas reduction target of at least net 55% by 2030 compared to 1990, as set out in the European Climate Act.

This bill includes the intention to assign to the Dutch Emissions Authority (Nederlandse Emissieautoriteit, or NEa) the tasks as referred to in the European Commission’s proposal for the CBAM. The bill provides for the designation of the NEa and for a number of provisions required to implement the regulation during the transition period. As the CBAM Regulation is not expected to be actually adopted until the end of 2022, it has been chosen to submit this bill in anticipation of its adoption. This will allow timely preparation before the regulation comes into effect.

Changes to bpm and motor vehicle tax

Vans registered in the name of entrepreneurs are currently exempted from private motor vehicle and motorcycle tax (bpm). In other cases, a van’s net list price is used to set the bpm. For budgetary reasons, the Tax Plan proposes to abolish the exemption for entrepreneurs’ vans effective from 1 January 2025. What’s more, instead of being set according to the net list price, the levy for vans will be set in proportion to CO2 emissions. So effective from 2025, the basis for determining the bpm for vans will be the same as for passenger cars. In addition, the motor vehicle tax (mrb) rate for entrepreneurs’ vans will be increased. The increase will be 15% in 2025, followed by a further increase of 6.96% in 2026.

The bpm payable is calculated using the rate times the number of grams of CO2 emissions per kilometre. The rate is a fixed amount of EUR 66.91 (2023 price level). Due to this calculation system, the bpm of an emission-free van is zero. Effective from 2025 onwards, the rule for regular vans that do emit CO2 is that the more they emit, the higher the bpm will be. This is expected to provide an incentive for purchasing an emission-free or fuel-efficient van.

Increase in air passenger tax

An increase of EUR 17.95 in air passenger tax rate will apply as from 1 January 2023. The new rate will amount to EUR 26.43 per departing passenger. This measure is included in the coalition agreement and aims to discourage flying, especially on short distances with a proportionally higher burden of air passenger tax. Structural revenue from this measure should amount to EUR 400 million a year.

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