Fiscal measures from the outline agreement

On 15 May 2024, the four forming parties PVV, VVD, NSC and BBB (hereinafter: the parties) presented their outline agreement which will form the basis for the legislation of the new potential government. Some interesting elements in respect of taxes can already be identified from the agreement and its financial annex. Below, we discuss the main points.

General

The parties put the improvement of the Dutch business climate first. As a result, parties want to reverse some of the tax increases announced on Budget Day 2024. Financing these tax cuts will include increasing some other taxes. It is also proposed to further phase out negatively assessed tax schemes and tackle unintended constructions.

Corporation income tax and dividend tax

• The interest deduction limit for the purpose of corporate income tax will be relaxed by allowing an interest deduction of 25% of EBITDA instead of 20%. The other limit of EUR 1 million will remain. The outgoing cabinet’s plan to remove the EUR 1 million limit for real estate entities is not being discussed but is expected to remain.
• The proposed abolition of the dividend tax buyback facility for listed companies will be reversed.
• The gift deduction in the corporate income tax act will be limited in the coming years with the first step being taken in 2025.

Income tax

• The decision to reduce the profit exemption for medium-sized companies from 12.7% to 12.03% will be reversed.
• The measure to increase the rate in box 2 from 31% to 33% from 1 January 2025 will be reversed.
• The rate in box 3 will be reduced. It is not clear what the extent of the rate cut will be and how the potential new government views the ways proposed thus far to start taxing actual returns in box 3.
• The gift deduction for personal income tax purposes will be limited in the coming years, with the first step being taken in 2025. From 2028, the distinction between different types of gifts in income tax will disappear.
• The arrangements around mortgage interest deduction and the deemed income from own home (in Dutch: eigenwoningforfait) remain unchanged.

VAT

Part of the tax plans in the outline agreement of the forming parties also include some VAT rate changes on cultural services and accommodation. Below is a brief overview of the proposed changes that, according to the agreement, will come into effect as of 2026.

Cultural services and goods

Based on the outline agreement, the forming parties intend to abolish the reduced rate (9%) on cultural services and goods. It is not yet fully clear exactly which services and goods will no longer be covered. This still needs to be further elaborated in the coalition agreement. However, at the moment, it seems that most goods and services will no longer fall under the reduced rate on the basis of this item, insofar as they can be classified as ‘cultural’. Items included are for example:

• Entry to theatre, circus, museums, etc.
• Supply of books, magazines and newspapers
• Lending books
• Import and delivery of works of art

However, it has been made clear that cinemas, amusement parks and similar recreation will not become part of the change in tax rate.

Comment Atlas

Depending on how the amendment is worded in the legislation, we foresee discussions regarding the application of the reduced rate and the distinction made in the cultural sector. If this change does indeed go ahead, it may be advantageous to bill ahead and thus anticipate the increase.

Hotels

Lodging is currently taxed at 9% VAT as long as the stay qualifies as short stay. This can include hotels, holiday homes and guesthouses, for example. Currently, the parties intend to tax such stays at 21% VAT. The reduced rate currently also applies to camping sites, this will continue to apply according to the agreement.

Comment Atlas

Uncertainty may arise as to what is meant by ‘camping sites’, especially if multiple forms of ‘camping’ are offered on such a site (i.e. tents, cottages, empty pitch). Again, advance billing may be an advantage.

Questions?

The parties are now in the final stages of forming a government. So for now, it is mainly a matter of waiting to see whether the new government in this form will actually come into being and when we will then see the first concrete tax legislation proposals. We will of course keep an eye on developments in this regard and should you want to know more about the agreement, please feel free to contact us,