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It’s almost 2023 and the tax man has a sack to fill

This might be a time of year for gifts and resolutions – but there will be money to pay back in 2023.

That is the message of finance minister Sigrid Kaag, who has warned that the state will be folding up its safety net for some people and raising funds for the treasury in the months to come.

‘It might have been Christmas, but Scrooge is still with us,’ said an expert from tax advisors Blue Umbrella. ‘The government is searching for money, there is still inflation, and government spending will mostly be funded by business.’

Tax changes in 2023 will hit businesses, entrepreneurs and freelance workers the most.

Corporate tax

First of all, corporation tax will rise. The lower rate for profits of up to €200,000 will increase from 15% in 2022 to 19% in 2023; the top rate remains the same at 25.8%, but starts at €200,000 instead of €395,000.

Taxation will also increase for people who own more than 5% of shares in a business directly or indirectly – which is now taxed in ‘box 2.’

The rate in this box is set to rise for dividends of more than €60,000, with a new top level of 40.59%. Below this, the tax burden will shrink very slightly, from the current flat rate of 26.9% to 26%. Meanwhile, people will no longer be able to use reserves in their business to build an ‘old age’ fund that they can later draw down as a pension, which could save taxes if they then qualified for lower rates.

Businesses with employees will also need to absorb the costs of a 10% rise in the minimum wage, which could be a challenge alongside a tight jobs market.

Property and children

In the world of property, the government is trying to make it more appealing for private individuals to buy than corporate or buy-to-let investors. The transfer tax for people buying a home as an investment will rise from the current 8% to 10.4% – compared with 2% for individuals over the age of 35.

However, parents will no longer be able to give their adult children under 40 a gift of €106,671 tax free to help buy a first house. This tax break will disappear and parents will be able to give their offspring a tax-free gift of €27,231 for that year only. Some experts suggested the allowance made the housing market less of a fair playing field and further pumped up prices.

The government wants to make childcare costs largely free for parents by 2025 and this month, the government decided to increase the childcare allowance for next year, in order to prevent working parents from getting into a jam.

High inflation and salary rises, though, mean fees from childcare providers will go up. ‘The bottom line is: what parents pay will be higher,’ said a Blue Umbrella expert.

Tighten your belt

Meanwhile, the tax-free allowance for freelancers, or ZZP’ers, is going down so this group will pay more tax. The tax break is being cut from € 6,310 in 2022 and will be just €900 a year in 2027.

A small compensation is that the level of childcare allowance in 2023 for freelancers will no longer depend on how many hours they work.

For some of us, a good New Year’s resolution might be to tighten our budgets a notch or two.

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