Amendments mentioned in the Budget Plan 2018

18 Nov Amendments mentioned in the Budget Plan 2018

Every year on the third Tuesday of September, the Dutch government reveals its Tax Plan for the coming year to the House of Representatives (Tweede Kamer). This day is known as ‘Prinsjesdag’ (Budget day). The revealing of the Tax Plan on this day is obligated under the Dutch constitutional law. The Tax Plan includes proposed bills aimed at simplifying the tax system and providing measures to address tax arrangement and tax evasion for the coming year. This article will outline proposed bills and legislative amendment that will go into effect in 2019 and 2020, which might be of interest to you.

Reduction of the corporate income tax rates
The corporate income tax rates will be reduced from 2019 onwards until 2021. This reduction will be done gradually. In the current corporate tax law, we know a low tariff which is 20% and a high tariff which is 25%. The low tariff is used for profits up to EUR 200.000. The high tariff is used for profits above that amount. Please find below the amendments of the tariffs for the corporate income tax.

Profit                       2018                         2019                       2020                        2021
0 – 200.000            20,0%                      19,0%                      17,5%                       16,0%
200.000 <               25,0%                       24,3%                      23,9%                      22,25%

The dividend withholding tax abolishment
The dividend withholding tax is due when a company decides to distribute dividend to its shareholders. The distributed dividend is taxed for 15% since 2007. The government has substantially discussed about the abolishment of the dividend withholding tax this year. As expected, it is included in the Budget Plan of 2019. The Cabinet mentioned that the abolishment of the dividend withholding tax will cost the government around 2 billion euro a year. They also said that this is the only solution to maintain the attractive fiscal business and investment climate in the Netherlands. It is proposed to abolish the dividend withholding tax from 1^st of January 2020. However, a withholding tax on dividend will be introduced for distributed dividend to affiliated shareholders which are established in countries with very low tax rates. In addition, in order to prevent international tax avoidance, a withholding tax will be implemented on interest and royalty payments to countries with very low taxes as from 1^st of January 2021. The abolishment of the dividend withholding tax has no impact on the personal income tax. A taxpayer is still required to pay tax in his personal income tax return for the benefits he receives from the company if the he owns at least 5% of the shares in the company. The tax tariff which is due for a taxpayer is currently 25,0%. The tax tariff will be increased to 26,25% by 2020 and 26,90% by 2021.

Limitation of amortization of a real estate for the corporate income tax
It is currently possible to amortize buildings which are for own use till 50% of its WOZ value. From 1^st January 2019 onwards, the amortizations of these buildings are limited to 100% of its WOZ value. As result it is possible that many companies can not amortize their buildings anymore. This regards buildings which the booking value is already under the WOZ value. On the other hand, it is not needed to enhance the book value.

If you would like to receive more information and/or professional advice on the impact of proposed bills of your organization, do not hesitate to contact us.