Tuesday, September 22, 2020
The Dutch Government has decided to cancel a planned decrease in the corporate tax rate in its 2021 Tax Plan.
The Tax Plan, announced on September 15, 2020, maintains the headline corporate tax rate at 25 percent. This reverses a previous proposal, announced in November 2019, to reduce corporate tax to 21.7 percent in 2021. However, corporate tax for small companies will be cut from 16.5 to 15 percent as previously planned. This will apply from 2021 on profits up to EUR245,000 (USD290,000), up from EUR200,000 currently. This threshold will increase further, to EUR395,000, in 2022.
The Tax Plan will reduce the scope for companies to offset losses from 2021, while the rules surrounding hybrid mismatch arrangements will be tightened. The Government also intends to explore changes that will make the tax treatment of debt and equity more equal, which could entail a strengthening of the limitation on the deduction of interest expenses.
The Tax Plan also includes plans for a carbon tax from January 1, 2021, at an initial rate of EUR30 per tonne. This will apply to industrial production and waste incineration and will increase at a rate of EUR10.56 per year until 2030, when the tax will reach EUR125 per tonne of carbon dioxide emitted.
A key personal income tax measure in the Tax Plan is a proposal to increase the tax rate on savings and investment income ("box 3" income) from 30 to 31 percent from 2021. However, a tax exemption will be provided for savers with assets of up to EUR50,000. Further, the basic income tax rate will fall from 37.35 to 37.10 percent in 2021.
Finally, the tax allowance for self-employed taxpayers will be reduced at a faster rate than originally planned so that it reaches EUR3,240 in 2036, instead of EUR5,000 by 2028. However, the Government says that the effect of this measure will be offset by improvements to the employment tax credit and changes to the income tax rate.