Monday, October 4, 2021
The Dutch Government has announced changes aimed at improving the tax system in its 2022 Tax Plan, released on September 21.
The Dutch Government said improvements will be made to existing taxes in the areas of housing, employment, the environment, and business startups. However, the Tax Plan package contains considerably fewer policy measures than in previous years, in keeping with the Government's caretaker status.
The measures announced are as follows:
Working from home
From January 1, 2022, it will be possible to provide a tax-free home working allowance of up to EUR2 per day.
Employers already had the option of providing a tax-free allowance for setting up a workspace at home. A tax-free travel-to-work allowance of up to EUR0.19 per kilometre will also continue to exist, for days on which an employee goes to the office.
The employee and employer can make agreements about the number of days per week on which the employee works from home, so that the employer can pay a fixed allowance. The amount does not need to be adjusted if work is occasionally done at the office on a home working day, or vice versa.
The Government has said various changes will be made to the home ownership-related tax rules and transfer tax will be made "fairer" from January 1, 2022.
Since January 1, 2021, buyers under the age of 35 have not had to pay transfer tax when purchasing their first home. Buyers aged 35 or over who are going to live in the home themselves pay two percent, while buyers who are not going to live there pay eight percent. Under a new government measure, buyers who decide not to proceed with the purchase due to unforeseen circumstances, after signing the purchase contract but before the transfer of ownership, will not automatically pay the eight percent rate.
In addition, where housing associations and property developers sell homes to first-time buyers or people with a lower middle income at a substantial discount and later buy them back from those individuals, they will no longer pay transfer tax from January 1, 2022 (this year they have to pay eight percent). As a result, these homes will remain affordable for subsequent private buyers.
Further, the Government is proposing to amend a number of provisions to remove unintended consequences in law, for example in cases where someone who already owned a home buys a home with a partner, or where someone owns a home with a partner and the partner dies.
Measures to encourage the sale of zero-emission cars will continue next year. As such, where employees make private use of company cars, the reduction in the percentage of the vehicle's value that is added to their taxable income will remain in place until the end of 2025.
However, the maximum vehicle value (or 'cap') to which the reduction applies will be lowered sooner than set out in the National Climate Agreement. This means that the maximum vehicle value subject to the six percent reduction applicable from January 1, 2022, will be EUR35,000, falling to EUR30,000 from 2023. The percentage of the remainder of the vehicle value that will be added to taxable income will be the standard percentage: 22 percent.
The environmental investment tax credit percentages will be increased to give businesses an extra incentive to invest in innovative, environmentally friendly business assets. This will allow them to deduct more costs from their taxable profit. From January 1, 2022, the percentages will be increased from 13.5 percent, 27 percent, and 36 percent to 27 percent, 36 percent, and 45 percent, respectively.
Measures for startups
Tax is payable on employee stock options since they are a form of salary. Tax is currently levied if an employee converts the options into shares. This means that employees (and the employer) have to pay tax immediately, whereas they cannot always afford this and are not yet always allowed to sell the shares.
From January 1, 2022, tax will therefore normally be levied only once the shares can be traded and money becomes available. Taxpayers can however opt to be taxed under the existing rules.
Measures in the Tax Plan and separate measures tabled in the House of Representatives will further strengthen Dutch rules that are intended to counter the use of hybrid mismatch arrangements, the Government says.
Changes in corporation tax offsetting
Finally, in response to a European Court of Justice ruling, from January 1, 2022, around 20,000 Dutch businesses will be allowed to offset advance payments of dividend tax and tax on games of chance (withholding taxes) only against payable corporation tax. If no corporation tax is owed in a particular year, the Tax Administration will no longer provide a refund in that year.
The business can offset the withholding taxes in a later year against payable corporation tax. This does not have to be done in the very next year; withholding taxes that have not been offset can be carried forward indefinitely to later years.