The autumn budget, aiming to boost “equality of opportunity” and create a secure future for the most vulnerable in Dutch society, will cost most taxpayers a little more, according to experts.
The so-called “bill for millions” or miljoenennota will impact all individual taxpayers, particularly the highest-paid employees, thanks to a raft of new and expected measures.
“Tax will be raised for people with normal and high incomes, so this will probably not be to their benefit,” said a spokesman for Blue Umbrella, which has helped 50,000 internationals with their tax returns.
“It’s good for the people who don’t have much income because they will have more cash to spend, more allowances such as for rent,” he said. “But those with an average income, what we call the modal income, will be worse off. That’s the group that already pays a lot of taxes.”
Anti-poverty measures in the budget, costing some €2 billion, include raising housing benefit by €416 a year, increasing child benefits and continuing to support the least wealthy families with their energy bills.
The costs will be paid partly by raising the threshold for the top income tax band of 49.5% by less than inflation.
This means that salaried income above €75,624 will incur the top rate of tax (compared with €73.031 this year), corporate tax will rise and tax will go up on tobacco and alcohol. It will also no longer be possible for wealthier parents to give money tax-free to their children, above the normal limit of around €6,000.
The Dutch tax system is divided into three ‘boxes’ for different types of income. Box 1 is related to earnings and your own house and box 2 is for dividends when people have more than a 5% share in a company.
From 2024, the government wants to introduce two brackets instead of one for box 2. If it goes ahead, this means 24.5% tax will due on the first €67,000 of this income per person and above this, the rate will be 31%.
The aim is to make it less advantageous for people to defer tax by keeping profits in a company and pay out more in dividends.
Box 3 is related to wealth, savings and other assets. The amount of wealth before tax kicks in here will not go up in line with inflation and the tax rate will rise to 34%, which will also boost the tax bill of people with investments in stocks and shares and property.
There are some changes to the way business gifts to good causes (ANBIs and SBBIs) will be treated for tax, so you should take advice on whether it is better to give this year or next year if you are a charitably-minded firm.
One upcoming positive for Dutch entrepreneurs who have activities in another member state is that from January 1, 2025 it should be possible to use a small business allowance (KOR) if EU-wide revenue is under €100,000. (It’s wise to check if the member states where you operate have different thresholds).
There’s also good news for business commuters: starting in January 2024 the tax-free amount a company can give employees for travel will increase from 21 cents to 23 cents per kilometre. In addition, tax will no longer be levied on a public transport card provided by a company, if used for business travel.
The tax-free allowance for small and medium-sized businesses will also drop from 14% to 12.7%.
The government has resigned and is operating in a “caretaker” role, so by convention, it cannot make big decisions on controversial subjects and the budget needs to be agreed by parliament.
A general election will happen in November, and a central subject is immigration – something that may impact expat students and people with tax advantages such as the 30% ruling.
“If you have the 30% ruling now, your term will carry on for the five years,” said the Blue Umbrella spokesman. “For the future, I don’t really see it getting tighter because there’s a huge problem with finding people for jobs: we need you. But there is a cultural discussion about classes in English and the level of international students.”
However, what is already certain is that the 30% ruling will be capped. From January 1, 2024, the perk will be limited to the Balkenende norm (130% of a ministerial salary, and currently €223,000).
Some political parties have plans that will cost serious money and it’s unclear what this will mean for taxpayers in the future. Will the average taxpayer have enough spare cash next year to buy a new fancy hat for Prinsjesdag, budget day 2024? Much depends on the outcome of the November election, said the Blue Umbrella spokesman. “We will just have to wait and see.”
For cost-efficient tax services for expats, contact Blue Umbrella
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