Greening measures

In June 2019, the Cabinet announced the climate agreement, which focussed on greenhouse gas emissions. The Climate Agreement Tax Measures Act set out the climate agreement's policy plans. Implementing measures relating to motorised vehicles and higher taxation of natural gas are just some examples of the plans.

Car measures

Company car tax (addition for the private use of a company car to taxable income)

Currently, there is a lower additional tax liability of 4% for emission-free cars compared with the higher rate of 22% for cars that emit CO2. The Cabinet is continuing its tax incentives up to and including 2025. The reduced rate currently applies up to a list price of €50,000, while the higher rate applies to the higher prices. The climate agreement, which was introduced in June 2019, aims for all new cars to be emission-free no later than 2030, and changes are therefore being made to the incentive. The company car tax rate on emission-free cars is gradually increasing up to 2026, when it will be just as high as the rate for other cars. The maximum amount to which the reduced company car tax rate applies is being gradually reduced until it reaches an amount of €40,000 in 2021. This “cap” does not, however, apply to hydrogen and solar cell cars.

 

 

Additional tax liability

Maximum amount

2019

4%

€50,000

2020

8%

€45,000

2021

12%

€40,000

2022

16%

€40,000

2023

16%

€40,000

2024

16%

€40,000

2025

17%

€40,000

2026

22%

n/a

New testing method for CO2 emissions

At EU level, a new testing method has been introduced to determine CO2 emissions from light vehicles (the Worldwide harmonized Light vehicles Test Procedures, WLTP). With effect from 1 January 2022 this will be the only testing method used to calculate CO2 emissions. This new testing method is more accurate that the alternative testing methods and results in higher emissions being detected. The greatest impact will be felt on private motor vehicle and motorcycle tax (BPM), now that the tax owed is determined on the basis of CO2 emissions. In order to prevent the use of a new testing method resulting in higher private motor vehicle and motorcycle tax, the Cabinet is proposing making changes to the private motor vehicle and motorcycle tax tariff schemes in order to keep them as budget-neutral as possible.

 

Other car measures

  • The duty on diesel is being increased. With effect from 1 January 2021, prices will increase by 1 cent per litre. With effect from 1 January 2023, prices will increase once again by 1 cent per litre.
  • Emission-free cars are currently exempt from motor vehicle and motorcycle tax. This exemption is to remain in place up to the end of 2024. With effect from 2025, a fixed amount of €360 in motor vehicle and motorcycle tax (BPM) will be charged for these cars.
  • Currently, passenger cars and vans powered by a compression ignition engine are subject to a surcharge to offset the duty credit enjoyed by diesel cars. Now that compression ignition engines are also found in petrol cars, there is a proposal to modify the scheme so that the surcharge only applies to diesel cars.
  • In 2025, the motor vehicle tax exemption for emission-free cars will be replaced by a payment of 25% of the current rate. From 2026, the exemption will end completely. For cars that emit more than 0 grams, but not more than 50 grams of CO2 per kilometre – the “plug-in hybrids” – the current half-rate will be increased to a three-quarters rate in 2025 in order to entirely eliminate the tariff reduction in 2026.
  • Changes are being made to the motor vehicle tax for company vans. The motor vehicle tax rate for light company vans will increase by less than €24 up to the end of 2025, while the rate for heavy van-type vehicles will increase by more than €24.
  • Changes are being made to the fine particulate surcharge. The proposal is to also tax diesel cars registered since 1 September 2009, since it cannot be assumed that cars that were manufactured after this date will stay below the fine particulate standard.

 

Promoting sustainability

In order to promote sustainability, the Cabinet is proposing heavier taxation on natural gas and lower taxation on electricity, in order to make it more attractive to switch to more sustainable heating options. Energy tax for the first bracket will increase by 4 cents per m³ in 2020 and by 1 cent per m³ in the six subsequent years. The aim of this is to create a stronger incentive for sustainability, so that investment costs can be recouped more quickly.

 

In addition to the changes to energy tax, a number of additional measures are being taken to make investing in sustainability more viable, such as a higher energy investment allowance for landlords and a higher sustainable energy investment grant to encourage investment in sustainable and energy-efficient equipment, such as purchasing a heat pump within business premises or residential homes.

 

Finally, the business sector will contribute more to the levy for storage of sustainable energy (ODE). Two thirds of the total revenue must consist of the total proceeds from contributions from the business sector, rather than half, which is the case currently.

 

Waste tax

In the Environmental Taxes Act (Wet belastingen op milieugrondslag), a change is being made to one of the taxable events in waste tax. Currently, waste created within an institution (such as standard industrial waste and combustion residues) and removed again within that institution by means of combustion is subject to double taxation, namely at the point of combustion and the point of dumping within the same institution. The proposal is for the removal of combustion residues within the institution itself to be exempt from the waste collection levy.

 

Furthermore, since 2015 the waste tax has been levied when dumping or incinerating Dutch waste. The proposal is for the waste tax to include foreign waste that is incinerated in the Netherlands. This measure is a result of the Urgenda ruling, according to which the Netherlands had to reduce greenhouse gas emissions by 25% in 2020 compared with 1990.

 

Large-scale insurance against bad weather

Large-scale insurance against bad weather has been in place since 2010 and is a tool used to cover previously uninsurable weather risks. Currently, 65% of costs are reimbursed. The part that is reimbursed is falling to 63.7%, creating the scope to be able to offer an exemption from insurance premium tax of 21%. Without reducing the fee, this would be above the 70% limit which is intended as the maximum for government aid. After tax, the measure amounts to an increase in aid from 65% to 70%.

 

Introduction of CO2 tax for industry postponed

Within the EU, negotiable emission allowances currently apply; companies must possess these allowances in order to be able to emit emissions, with the aim being to bring about a global reduction in CO2 emissions. The quantity of emission allowances is being gradually reduced. The tradability of these allowances does not, in itself, guarantee that Dutch industry will achieve a reduction in CO2. For this reason, it was announced in the climate agreement that an additional CO2 tax would be introduced. However, more time is needed to work out the details, and this has been postponed to next year.

 

Comment by PKF Wallast

Many of the measures that have already been announced in the climate agreement have been set out in separate legislative proposals. The car measures are the most notable. The tax on emission-free cars will increase gradually until the standard rate of 22% is reached in 2026. In addition, the measures will partly be funded by industry, as can be seen in the levy for storage of sustainable energy, and partly absorbed by the increase in transfer tax for non-residential buildings. For more information, see the housing market section.

 

Measures already announced

Private use of a company bicycle

Just like for (private use of) company cars, there is a fixed additional tax liability for the private use of a company bicycle. This means that employees have to add 7% of the value of the recommended price of their company bicycle to their income. This scheme will apply with effect from 1 January 2020.

 

Air passenger tax

In order to discourage citizens and companies from making polluting choices, the Cabinet intends to introduce an air passenger tax as part of the fiscal greening policy. This intention has now been brought before the House of Representatives by way of a separate legislative proposal.

 

Currently, no VAT or fuel tax is levied on air traffic, while other (less polluting) motorised vehicles are subject to taxation. The rate is expected to be around €7 per passenger (transfer passengers are exempt). For freight transport, the rate will be between €1.925 and €3.85 per 1000 kg of weight, depending on the noise they produce.

 

The Cabinet indicates that a European approach will have the greatest impact on air traffic, but in the absence of a European air traffic tax, a unilateral scheme will be introduced nationally with effect from 1 January 2021. The current scheme is therefore not certain.

S.H. (Stephen) Vergeer MB RB Advisor
S.H. (Stephen) Vergeer MB RB, Advisor
dr. J. (Jeroen) van Strien Advisor
dr. J. (Jeroen) van Strien, Advisor
Prof. dr. J.C.M. (Hans) van Sonderen Advisor
Prof. dr. J.C.M. (Hans) van Sonderen, Advisor
mr. drs. R.W. (Ruud) van der Linde Advisor
mr. drs. R.W. (Ruud) van der Linde, Advisor
mr. S. (Sicco) van den Berg Advisor
mr. S. (Sicco) van den Berg, Advisor
I. (Ibrahim) Ahmed LL.M. Advisor
I. (Ibrahim) Ahmed LL.M., Advisor
drs. A.T. (Andor) Valkenburg Manager Amsterdam, Advisor
drs. A.T. (Andor) Valkenburg, Manager Amsterdam, Advisor
mr. H.J.A. (Huub) Nacken Advisor
mr. H.J.A. (Huub) Nacken, Advisor
mr. R.C. (Ron) Henzen Advisor
mr. R.C. (Ron) Henzen, Advisor
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