Corporate income tax rates
Dutch corporate income tax is levied through two profit brackets. In 2022, the first profit bracket increased to profits up to and including € 395,000. These profits are subject to a corporate income tax rate of 15%. All profits in excess of this amount are subject to a corporate income tax rate of 25.8%. According to the Budget Day plans, the profit threshold of the first corporate income tax bracket will be reduced from € 395,000 to € 200,000 in 2023. Furthermore, the lower corporate income tax rate will increase to 19%.
Cap on the 30% tax facility
Foreign employees who migrate to the Netherlands can – under conditions – use the 30% tax facility. Based on this facility, an employer can pay up to 30% of the wage of the employee free from wage tax. At Budget Day 2022 it was announced that there will be a wage cap for the application of the 30% tax facility. This implies that under the new legislation, the 30% tax facility can only be applied for wages up to a certain threshold. The threshold is aligned with the “Standards for Remuneration Act” (‘Balkenende’ norm) which is € 216,000 as per 2022. The new rule will be implemented as per 1 January 2024.
Real Estate Transfer Tax
The general real estate transfer tax rate will increase from 8% to 10.4% per 2023. The general rate applies to the following acquisitions:
- the acquisition of non-residential real estate;
- the acquisition of residential real estate by legal entities, and;
- to the acquisition of residential real estate by private individuals who do not intend to use the residential real estate as their main residence for a long term period.
The real estate transfer tax rate for acquisitions of real estate will remain 2% when this residential real estate is used as a main residence. Furthermore, a tax rate of 0% will remain applicable for first-time buyers who meet the conditions. In the graph below we show the evolution of the general real estate transfer tax rate.
Dutch tax law provides for tax facilities related to investments in environmentally friendly business assets. Two important investments facilities are the Environmental Investment Allowance (MIA/VAMIL) and the Energy Investment Allowance (EIA). Companies can receive an additional deduction for investments in environmentally friendly business assets that are listed on either the Environment list (Milieulijst) or the Energy ist (Energielijst). Although the rules for the investment regulations remain the same in 2023, the government has announced a budget increase of € 150 million for these facilities.
CO2 tax for industry
In 2021 the tax for CO2 emissions by industry was introduced in the Netherlands. This tax is applicable to the following types of companies:
- large industrial companies that fall within the European Emissions Trading System (EU ETS)
- waste incinerators, and
- companies of which the emission of nitrous oxide exceeds a certain threshold.
The rates for emissions will not change in 2023, but the tax-free threshold will decrease in accordance to a formula. Additionally, a minimum price of € 16.40 per ton CO2-equivalent will be introduced in 2023. It is expected that the tariff will increase to € 31.90 per ton CO2-equivalent in 2030.
Other points to consider
In addition to the plans as announced on Budget day, there are other important proposals pending which could be relevant for international companies. In particular, we would like to underline the following proposals.
DAC7 introduces obligations for operators to collect and report information on participants of particular digital platforms that sell goods or provide particular services. On 23 March 2022, the Dutch legislative proposal for the implementation of DAC7 was submitted to parliament. The first reporting deadline is planned to be on 31 January 2024, but relates to all relevant transactions as from 1 January 2023. As such, data management will be even more crucial to all digital platform operators as of 2023.
Another important measure which is currently pending with the European Commission is the DEBRA-proposal (‘debt-equity bias reduction allowance’). This proposal aims to address the asymmetric tax treatment between debt and equity financing. To assure a more level playing field between debt and equity financing DEBRA introduces an allowance on equity as well as a further limitation on interest deduction. If adopted the DEBRA proposal should be transposed into national law by December 31, 2023 and should take effect as of January 1, 2024.
The last pending measure we would like to address is the ATAD3 -proposal. This proposed directive introduces rules regarding the substance of EU-based entities. If companies do not meet certain thresholds, there could be adverse tax consequences and additional reporting requirements for so-called shell companies. The proposal is currently pending at European level. The final implementation is currently debated.