29/09/22

NETHERLANDS: Dutch 2023 Budget proposes changes to tax and anti-avoidance measures.

As published on step.org/industry-news, Thursday 29 September, 2022.

The Dutch government has presented economic proposals for 2023 onwards, including changes to corporate and personal income tax and a limitation on tax exemptions for foreign workers.

From 1 January 2023, there will be an increase to corporate income tax, with the low rate increased from 15 per cent to 19 per cent. The threshold for paying the upper rate of corporation tax will also decrease from companies with taxable profits above EUR395,000 to those with taxable profits above EUR200,000.

For shareholders with ‘substantial interest’ in companies, two rates of income ‘box 2’ tax will be introduced from 2024. This applies to shareholders with a direct or indirect interest of 5 per cent or more in a company or partnership. For such shareholders, the current 26.9 per cent rate will remain in 2023, before splitting into a lower-rate band of 24.5 per cent for box 2 income of EUR67,000 or less and a higher-rate band of 31 per cent for such income of more than EUR67,000.

Foreign workers based in the Netherlands will see a restriction on the current rule that 30 per cent of their wage earned in the country is tax free. From 2024, this will be applied only to a maximum salary basis. Currently this is set at EUR216,000, but the figure will be adjusted by 2024.

The Budget also includes anti-avoidance measures. From 1 January 2023, a conditional withholding tax of 25.8 per cent will apply to dividends paid to entities that are tax-resident in jurisdictions that are considered by the Netherlands to be low-tax or are on the EU list of non-cooperative jurisdictions for tax purposes. This tax may be levied by the government in addition to the 15 per cent dividend withholding tax.

The proposals will now be reviewed in parliament and, subject to legislative change, are expected to be enacted in December 2022.