Finance minister Wopke Hoekstra is looking into the option of speeding up the planned reduction in mortgage tax relief in return for support from the EU’s coronavirus crisis recovery fund, the Financieele Dagblad said on Wednesday.
The European Commission considers the Dutch mortgage tax relief system, which is one of the most generous in Europe, to be a contributing factor to the high level of household debt in the Netherlands.
The Netherlands, the commission says, has the highest debt per household in the eurozone, which makes families more vulnerable to financial shocks – such as Covid-19.
The maximum tax deduction is currently being reduced in stages of three percentage points to the basic income tax rate of 37.1% by 2023.
But sources have told the FD that Hoekstra wants to speed this process up, to ensure the Netherlands carries out reforms and qualifies for some €6.5bn in ‘gifts’ from the EU recovery fund.
Nevertheless, the paper says, there is little support for a further cut in mortgage tax relief from the coalition parties, given that there is a general election in six months.
In addition, the paper said, it is likely that Brussels will accept reforms to the labour market and further action to stop tax dodging as qualification for EU fund support instead.
In the meantime, planned cuts in corporate tax rates, from 25% to 21.7% and from 16.5% to 15%, are now unlikely to go ahead, the paper said. Instead, the money earmarked for the tax cuts will be used to support companies most in need of help.