• Service: Tax, Global Indirect Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 10/18/2013

Netherlands - Tax provisions included in budget 2014 agreement 

October 18:  Political entities—the Dutch Cabinet, coalition parties, and parliamentary parties—on 11 October 2013 reached an agreement with respect to the 2014 budget.

Under the budget agreement, tax proposals include measures that focus on reducing the employment tax burden and reducing the marginal tax burden. These would be financed by certain “green tax” measures.

Overview of tax proposals

The budget agreement includes the following tax measures:

  • Temporary reduction of the “box 2” tax rate
  • Reduction in permissible margin for the “usual salary” of a director-major shareholder
  • Repeal of “moderation” provisions with respect to tax relief for self-employed persons
  • Measures to address “abuse” of business tax credits
  • Repeal of the work bonus for employed persons between the ages of 61 and 64 years
  • Repeal of a scheduled reduction of the general tax credit in the fourth tax bracket
  • Temporary reduction of the tax rate in the first tax bracket of box 1, by 0.75% in 2014
  • Amendment to the tax deduction for chronically ill and handicapped patients
  • Application of the reduced value added tax (VAT) rate of 6% for labor costs for renovation and maintenance of private residences for all of 2014
  • No reduction in the tax on motor vehicles
  • Enhanced CO2 emission standards for the tax on private motor vehicles and motorcycles
  • Increased tax rates on tap water and waste disposal

Tax Plan 2014

Memoranda of amendment to the Tax Plan 2014 bill and other tax measures for 2014 were presented to the Lower House after Budget Day, including measures that would:

  • Affect the treatment of private use of fully electric company cars in 2014 and 2015
  • Repeal the “small-scale investment deduction” (kleinschaligheidsinvesteringsaftrek) and the free depreciation of environmental investments (willekeurige afschrijving milieu-investeringen) for cars
  • Amend the inheritance tax, to include a requirement for financial statements and donations made
  • Amend the law on international assistance in tax collection to include a reporting obligation for service entities

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