Dutch 2024 Tax PackageLeave a Comment
Dutch 2024 Tax Package – Introduction
On 19 December 2023, the Upper House of the Dutch parliament approved the 2024 Tax Package.
This included the Tax Plan and various other proposals, set to be effective from 1 January 2024.
This approval, coming exactly three months post-publication, marks a pivotal step in the Netherlands’ fiscal policy.
However, it’s noteworthy that the Industry and Electricity Tax Climate Measures Act was not adopted.
What is included in the Dutch 2024 Tax Package?
End of Tax Relief for Share Redemption / Rate Increases
The tax relief for share redemption for listed companies will be abolished from 1 January 2025.
This change significantly alters the dynamics of share redemptions, impacting both companies and shareholders.
The statutory minimum wage is set to rise by 1.2%, prompting an increase in certain tax rates.
Notably, the top rate in box 2 will go up from 31% to 33%, and Box 3 tax rate to 36% from 2024.
Modifications to the 30% Payroll Tax Scheme
The scope of this scheme will be limited to EUR 216,000. Over the five-year period, the applicable rate will gradually decrease from 30% to 10%.
The partial foreign taxpayer status for expats using the 30% ruling will be abolished, with transitional rules in place until the end of 2026.
Amendments in Tax Classification for Dutch and Foreign Entities
Changes include provisions for open limited partnerships facing withholding tax obligations due to hybrid provisions in the Conditional Withholding Tax Act 2021.
Detailed guidance on classification tests and comparisons to Dutch entities is expected in Q1 of 2024.
Updates to the Minimum Tax Act 2024 (Pillar Two)
These amendments incorporate elements from the OECD’s model rules, including definitions and safe harbor rules.
Restriction of RETT Concurrence Exemption for Share Deals
This exemption will be limited from 1 January 2025, with transitional rules respecting certain agreements signed before 19 September 2023.
National Implementation of Public Country by Country Reporting (CbCR) Directive
The Netherlands has adopted the EU Directive for transparency in profit tax reporting, affecting multinational groups with revenues exceeding EUR 750 million.
The reporting obligation starts for financial years commencing on or after June 22, 2024.
Dutch 2024 Tax Package – Conclusion
The 2024 Tax Package represents a notable change in the Dutch fiscal regime, aiming for greater transparency and adjustment to global economic shifts.
While some of these changes, like the abolition of tax relief for share redemption and the amended 30% payroll tax scheme, bring about substantial shifts in tax strategies for businesses and individuals, the overall approach is geared towards a more equitable and transparent tax system.
Entities that affected by these changes should carefully assess the impact and prepare for the administrative requirements imposed by the new regulations.
If you have any thoughts on the Dutch 2024 Tax Pacakge, or Netherlands taxation at all, then please get in touch.