The Upper House of the Dutch Parliament has passed the measures as outlined in the 2019 Tax Plan in their entirety. The 2019 Tax Plan in addition to accommodating the actual Tax Plan also comprises the following draft legislation elements:
- Sundry Tax Measures 2019,
- Business Enterprises 2019,
- Tax Related Greenification Measures 2019,
- Adjustment of games of chance taxation of sports betting,
- implementation of Article 1 of the EU’s Electronical Commerce Directive,
- overhaul of Small Businesses Scheme,
- implementation of EU’s ATAD1 Directive,
- Nationally Listed Buildings Tax Measure.
Several motions were carried on the occasion of the MPs voting, such as that providing for annual index-linking of the maximum tax allowance for volunteers and that providing for assurance in advance, in connection with the subsidy scheme for listed buildings, of particular activities being subsidisable where they entail investments being made in excess of 70,000 euros within a single year. A motion aimed at having electric vehicles age five years and over admitted to the reduced addition scheme for private use that already applies to non-electric vehicles age 15 years and over was stayed.
Introduction of two-tier taxation system
Efforts are under way aimed at introducing a two-tier payroll and income taxation system. The tax rates for the first, second and third tiers as we now know them are virtually identical, with the first tier rate amounting to 36.65 percent this year and the second and third tier rates, to 38.10 percent each. The fourth tier rate (top income tax rate) amounts to 51.75 percent.
Tax reductions
The general tax reduction has increased, which in turn will improve the expendable income for those who earn up to 68,507 euros per annum. This year’s tax reduction has been fixed at 2,477 euros for incomes of up to 20,384 euros per annum. The employee tax reduction too has increased, to a maximum of 3,399 euros for 2019. The employee tax reduction rate for 2019 will intensify compared with 2018.
The tax rebate for the elderly has been maximised at 1,596 euros for 2019, and is set gradually to fall off from an income of 36,000 euros upwards. Last year still saw an abrupt transition from the higher to the lower rate of elderly rebate as soon as the income exceeded the relevant threshold.
The calculation of the income-dependent combination rebate has changed in 2019, in that the basic amount of 1,000 euros has been abolished whereas the accrual rate has been increased to 11,45 percent and the level of income allowing the maximum reduction of 2,835 euros being achieved will be lower in 2019 than was the case in 2018.
Tax credits
The rate of several tax credits has been reduced for those whose earnings weigh in at more than 68,507 euros per annum. This applies for example to the relief for interest paid on mortgage loans, the rate of which for top incomes has been fixed at 49 percent for 2019.
Tax relief for little to no home acquisition debt has been limited with effect from the first of January of this year. The tax relief in question will be subject to a 3.33 percent annual reduction over a 30-year period.
Volunteer work
The tax allowance for those who are involved in volunteer work throughout 2019 has been capped at 170 euros monthly, to a total of 1,700 euros annually. The hourly rate which is used in assessing volunteer work has changed to five euros.
Reduced value-added tax rate
The reduced value-added tax rate, which applies inter alia to basic necessities and to selected labour-intensive services, has been increased to nine percent from its former level of six percent.
Environmental taxes
The natural gas tax has increased whereas the electricity tax has been reduced.
Dutch version: Belastingplan 2019 aangenomen