Budget Day Special

On Tuesday, September 20, 2022, it is ‘Prinsjesdag’, Budget day. The Cabinet will present the tax plans for 2023. 

Selection of budget day proposals

This year’s proposals have very much been tailored on a number of – mostly inward focused – topics, including most notably;

  • Equalizing income from work, i.e. reducing differences between income from employment, (personal) entrepreneurial income, or income realized through a (personally held) corporate.
  • Restoring purchasing power in times of extraordinary inflation, including proposals to cap energy costs (to be further discussed);
  • Restoring the legislative gap on ‘deemed income from net wealth’ which was ruled in breach of the European Convention on Human Rights by the Dutch Supreme Court in December 2021.

Very few topics have been addressed that we consider of specific international interest, notwithstanding the fact that certain specific topics may severely impact our clients and our clients’ business.

Termination of the fiscal investment institution regime for real estate investment entities – 2024

It has been announced that the Dutch Government considers to end the Dutch fiscal investment institution regime – which provides for a zero percent corporate income tax rate – for real estate investment entities, as per January 2024.

Our view

The cancellation of the Dutch fiscal investment institution (« FII ») regime had already been planned for 2020, but at that time flanked by a cancellation of the Dutch dividend withholding tax. The latter has never been cancelled but even so the termination of the tax exempt regime for RE investments is now being pushed to 2024. Since the FII is frequently used by institutional exempt investors, subjecting it to corporate income tax will certainly result in restructuring needs and possibly divestments in the coming year. As that in turn may trigger – among other things – Dutch transfer tax, we certainly expect to be able to provide you with more information in the coming period.


Immigration of foreign employees – tax benefits reduced

Employees recruited from abroad are eligible for the 30% ruling, provided that certain conditions are met. The ruling allows them to receive 30% of their salary untaxed for a period of up to five years.

The Dutch Government proposes to cap the salary to which the 30% ruling can apply at EUR 216,000 as per 1 January 2024. The salary cap will increase as per 2024. Any salary in surplus of the cap will be fully taxed. The above means that employees applying for the 30% ruling can receive a maximum of EUR 64,800 untaxed (up to 2024, as per 2024 this amount will be higher due to increase of the cap). In case the actual extraterritorial expenses are higher than 30% of their (capped) salary, one can opt to have these expenses reimbursed without taxation.

A few remarks with respect to the proposed salary cap:

  • As soon as the salary cap is introduced, the employer and employee should make a choice between the application of the 30% ruling or the reimbursement of actual costs. This choice should be made every year and applies to the whole calendar year.
  • For 30% rulings which are currently applied, grandfathering rules are proposed up to 1 January 2026, meaning that their salary is only capped as per 1 January 2026.
  • Reimbursement of tuition fees for the international school should remain to be exempt from taxation even if the 30% ruling is applied.

Our view

The proposed salary cap in the 30% ruling may be an incentive for a potential candidate to start the employment this year as the candidate can benefit from the grandfathering rules. Starting in 2023 results in the salary cap being applicable.

This measure will increase the administrative burden for the employer, as each year the choice must be recorded whether to apply the 30% ruling or to reimburse the actual extraterritorial expenses. 


Corporate income tax rates and brackets

The Dutch Government proposes to reduce the first bracket of taxable income for corporate income tax purposes from EUR 395,000 to EUR 200,000. As per the same date the tax rate for the first bracket will increase from 15% to 19%. Please find an overview of the corporate income tax rates hereafter:

Bracket corporate income tax

2023

Taxable amount up to EUR 200.000

19%

Taxable amount as from EUR 200.000

25.80%

Our view

Please connect with your PKF connection to discuss possibilities – e.g. realising a book profit on assets or deferring expenses to 2023 – to make optimal use of the first bracket in 2022.

The Dutch Government proposes to reduce the first bracket of taxable income for corporate income tax purposes from EUR 395,000 to EUR 200,000. As per the same date the tax rate for the first bracket will increase from 15% to 19%. Please find an overview of the corporate income tax rates hereafter:

Bracket corporate income tax

2023

Taxable amount up to EUR 200.000

19%

Taxable amount as from EUR 200.000

25.80%

Our view

Please connect with your PKF connection to discuss possibilities – e.g. realising a book profit on assets or deferring expenses to 2023 – to make optimal use of the first bracket in 2022.


Eelco van der Vijver

SPECIALIST TRANSACTION SERVICES, MANAGER AMSTERDAM

Eelco van der Vijver (tax lawyer) heads up our Amsterdam office and is also a partner in the Transaction Services team. Together with the specialists from the various disciplines that give the team its strength, Eelco has extensive (international) experience in the transaction practice, from property transactions to initial public offerings, from fund structuring to participation schemes. Please give us a call and find out how we can help you!

Gerriët Nagelhout

ADVISOR

Advising clients on Dutch corporate taxation in their day-to-day business as well as on mergers, acquisitions, and all types of cross border transactions. Assisting clients in setting up businesses in the Netherlands, advising on compatibility with substance requirements. Performing due diligence and advising on and implementing of the acquisition structures. Involved in concluding tax rulings and other discussions with the Dutch tax authorities.

Do you have questions about the consequences of the measures for you or your company?

Our professionals are ready to support you with your issues. 


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