Changes for individuals
The main changes for individuals that were implemented into the Dutch (tax) legislation in the last few years are:
- As of 1 January 2023, the Dutch tax treatment of foreign remuneration of board members (‘directeuren en commissarissen’) of foreign-based companies will change. The approval to avoid international double taxation on executive and supervisory board remuneration by using the exemption method instead of the credit method will expire. This means that the Netherlands will only provide an exemption for this type of income if the exemption method has specifically been agreed in the bilateral tax treaty.
- As of 2021, 18- to 35-year-old first-time buyers on the housing market are eligible for a transfer tax exemption for houses under 440,000 euros (EUR). Buyers who don't plan to live in their home (investors) must pay a transfer tax of 10.4% in 2023.
- As of 1 January 2022, the basic rate of the disability act (WIA) has been split into a high and low contribution (the difference is less than 2 percentage points). The size of the employer is decisive for whether the high or low rate should be applied.
- The government will abolish the income-dependent combination discount (IACK) as of 2025. In case children were born before 1 January 2025, the IACK will continue to apply for these parents up until 2037. Furthermore, as of 1 January 2022, a change was made to the IACK. If a non-resident taxpayer works in the Netherlands but lives abroad, the partner abroad was not perceived to be a tax partner in the Netherlands. As a result, the non-resident taxpayer was unintentionally entitled to the IACK. As of 1 January 2022, this changed, and the tax partner abroad is now seen as the tax partner for the purposes of the IACK.
Tax status of independent contractors
On 1 May 2016, the Declaration of Independent Contractor Status (VAR) was abolished and replaced with the deregulation of labour relations assessment act (Wet DBA). Consequently, organisations that work with contractors must assess their engagement with their contractors to make sure that it does not qualify as an employment relationship. To support organisations with this assessment, the Dutch government launched a web module in order to (help) determine whether payroll taxes need to be withheld and paid. Despite the web module, there are still many doubts about the qualification of labour relations.
The Dutch government is working on providing further clarity. To that end, the definition of an ‘authority’ relationship between an employee and employer will be further clarified. Furthermore, the government is researching whether a ‘legal presumption’ can be introduced. In that case, the burden of proof that it does not concern an employment relationship rests on the provider of the work.
For the time being, the Dutch tax authorities will only act with regard to the Wet DBA (for example imposing tax assessments) in cases of evident and intentional false self-employment and when organisations do not (or insufficiently) follow the instructions of the Dutch tax authorities within a reasonable period. The government has announced that the Dutch tax authorities will start enforcing the law again by 1 January 2025 at the very latest.
Changes to the stock option regime as of 1 January 2023
Before 1 January 2023, employee stock options would generally be taxable once exercised. As of 1 January 2023, the taxable moment depends on when the shares, obtained with exercising the stock options, are considered tradable. Exercise will generally remain the taxable moment of the stock options in case the shares are immediately tradable or if the employee elects in writing to keep exercise as the taxable moment.
‘Working from home’ allowance
As a result of COVID-19, many employees have started working from home. Based on the expectation that a large group of employees will continue to work (partly) from home, a new fixed exemption under the work-related costs scheme was introduced from 1 January 2022. Employers can use this exemption to provide an allowance to their employees for the additional costs of working from home.
As of 1 January 2024, the 30% ruling (expat facility) can be applied to a maximum of the standard under the Standards for Remuneration Act (WNT-norm) (2023: EUR 223,000). In the case of expats who were already using the 30% ruling in 2022, the cap is only going to take effect as of 1 January 2026. In case the 30% ruling is applied as of 2023, then the income is subject to the cap as of 1 January 2024.
Furthermore, as of 1 January 2023, the employer must each year decide whether to reimburse the actual extraterritorial expenses or apply the 30% ruling and can’t change this during the year, except in the first four months of employment.
As of 1 January 2023, the tax-free travel allowance will be increased from 19 cents per kilometre to 21 cents per kilometre. In 2024, this will be further increased to 22 cents per kilometre.
Adjustments to box 2 in 2023 and 2024
As of 2024, the box 2 rates and credits will be adjusted. Please see the main changes below.
Introduction of two tax brackets in 2024
Two tax brackets will be introduced in box 2 as of 2024: a basic rate of 24.5% for the first EUR 67,000 of income per person and a rate of 31% for the remainder.
Abolition of the efficiency margin for usual wages for customary wages in 2023
The efficiency margin (previously 25%) for the wages of a director and majority shareholder is abolished in its entirety. As a result, the customary wage will become at least equal to the wage of the highest-earning employee within the organisation or at least equal to the wage of the most comparable employment outside the organisation. In addition, the statutory minimum lower limit still applies.
Adjustments to box 3 as of 1 January 2023
Box 3 applies to (deemed) taxable income from savings and investments.
In 2021, the Dutch Supreme Court ruled that, on a systematic level, the box 3 system as of 2017 and onwards infringed on the fundamental rights of taxpayers in such a way that it was untenable. Based on this ruling, the Dutch tax authorities had to provide restoration of rights for taxpayers who had been disadvantaged. For more information on the restoration of rights and the (groups of) taxpayers that are in scope of the restoration of rights please refer to our ‘box 3 guide’.
While the government is still working on a new box 3 system, which will be implemented as of 1 January 2027 at the earliest, a transitional system has been introduced for the years 2023-2026. This transitional system takes into account the actual asset mix of a taxpayer and divides these assets into three categories: (i) bank deposits (savings); (ii) other assets; and (iii) debts. The value under each category on 1 January will be deemed to yield a fixed percentage. The weighted average yield over all categories will be applied to the total assets above a personal exemption of EUR 57,000 (2023) to determine the taxable benefit that will be subject to tax at a flat rate of 32% (2023).
Phasing out general tax credits with aggregate income in 2025
The general tax credit is currently linked to box 1 income and is reduced in accordance with the amount of box 1 income a taxpayer has. Going forward, box 2 and box 3 income will also count towards the reduction of the general tax credit. As a result, people who mainly have income in box 2 or box 3 will receive a lower discount on the tax to be paid. It is expected that this measure will be introduced as of 2025.