Friday 07 October 2022

Income tax down, asset tax up: What the 2023 budget means for you

Photo: Bart Maat ANP

The Dutch government presented its 2023 spending plans to parliament on Tuesday. Here are the main measures:

Government finances

  • The budget deficit will rise to 3% of GDP, just within the EU’s official limit.
  • The national debt will remain at 49.5% of GDP, well within the EU norm.

Taxes and income

  • Income tax for incomes up to €73,071 will go down by 0.14 percentage point to 36.93%.
  • The income tax cut, combined with an increase in other tax discounts for people in work, will boost average incomes by €500 a year although the self-employed earning more than €70,000 a year will be slightly worse off.
  • Savings of up to €57,000 are exempt from asset taxes. This is up from €50,000 in 2021.
  • The tax on assets will increase from 31% to 34% over the next three years – based on the estimated increase in their value – currently 0.01% for savings and 5.53% for investments and property.
  • The tax discount for freelancers (zelfstandigenaftrek) will be reduced to €5,030 in 2023 and cut in stages to €900 by 2027.

Read the government’s summary of the tax plans in English

Other taxes

  • The tax on flying will rise by €8 per passenger to €26 per departure flight.
  • Transfer tax on buying property as an investment will rise to 10.4%.
  • The price of a packet of cigarettes will rise by over €1 to around €9, and will top €10 in 2024. Rolling tobacco will go up to around €17 next year.
  • The tax on soft drinks will rise by 11 cents.
  • Value-added tax on solar panels will be cut to zero.

Social security

  • The minimum wage, state pension and other benefits will rise 10% from January
  • Housing benefit will rise by €16.94 a month while over 500,000 low income tenants living in housing corporation property will be eligible for a rent cut of up to € 57 per month.
  • Healthcare benefits will rise by up to €43 a month to €134.
  • Childcare benefits will also rise to reach 96% of the cost by 2025.

Energy

  • A price cap is being introduced on energy bills which will run until the end of next year, limiting most households to a monthly payment of no more than €290.
  • The government is setting aside €50 million for a fund to help people who cannot pay their energy bills.
  • Low income families (up to 120% of the minimum wage), will be entitled to up to €1,300 in extra help to pay energy bills, payable by their local authority.
  • The reduction in taxes on petrol and diesel (17 cents less per litre of petrol and 11 cents less for diesel) will be extended to July 2023.
  • An extra €300 million has been allocated to help households make their homes more energy efficient, on top of the €4 billion which was set aside earlier.

Industry

  • The tax on profits will go up from 15% to 19% while the threshold for profit tax will go down from €395,000 to €200,000.
  • The ‘mining’ tax paid by gas and oil companies will go up to help pay for the energy bill measures.
  • €145 million has been set aside to stimulate the development of a hydrogen industry in the Netherlands, €180 million for offshore wind power and €200 million for district heating schemes.
  • Cars eligible for company car schemes must be fully electric from 2025.

Education

  • €1 billion has been allocated to combat ‘inequality of opportunity’ and €1 billion will go on improving the quality of education.
  • Students who live away from home will be entitled to an extra €165 next year, in addition to the basic student grant.
  • €1 billion has been reserved as compensation for students who were not entitled to student grants during the seven years in which they were scrapped.

Healthcare

  • The cost of health insurance will rise around €11 a month, taking the average premium to €137 a month – however, the exact increase is up to health insurers themselves.
  • Overall spending on healthcare will rise by €6 billion to €105.9 billion, largely due to pay rises.

Other

  • Members of the royal family will receive an extra €450,000 as income and personnel costs, taking official payments to the king, queen and others to €50.1 million.
  • €3.9 billion will go on support for Ukraine, of which €2.6 billion is for help to refugees
  • An additional €1 billion has been allocated to pay for refugee accommodation up to 2027
  • €100 million will go on preventing ‘vulnerable’ youngsters turning to crime and the same amount will go towards counteracting drugs crime, with a specific focus on ports and airports.
  • The defence ministry budget will increase by €5 billion a year to reach the Nato norm of 2% of GDP.
  • €5.2 billion has been allocated to stop the spread of coronavirus.

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