The Dutch Cabinet’s “2020 Tax Plan” package comprises the following six Bills:
- the 2020 Tax Plan Bill,
- the 2020 Miscellaneous Tax Measures Bill,
- the Tax Measures (National Climate Agreement) Bill,
- the 2021 Withholding Tax Bill,
- the Abolition of Tax Deduction (Education Expenses) Bill, and
- the Bill providing for the implementation of the Council Directive (EU) as regards the Harmonisation and Simplification of (certain rules in the value added tax system for the taxation of) Trade between Member States.
Tax Plan
The 2020 Tax Plan addresses the (accelerated) introduction of the dual-bracket income tax regime with effect from 2020 (rather than 2021, as had been planned). Both the employed person’s tax credit and the general tax credit are to increase. The latter change will favour lower income earners in particular.
The higher corporation tax rate (which applies to annual business earnings in excess of 200,000 euros) is not (yet) being reduced in 2020. The reduction of the higher rate is turning out 1.2 percentage point lower than had been envisaged in the 2019 Business Act. The higher rate of 25% is to continue to apply throughout 2020 and is being reduced to 21.7% effective the first of January 2021, from which date onwards the lower corporation tax rate is to work out at 15% (i.e. four percentage points down from its current level of 19%).
The disparity in the tax treatment of employees and sole traders is being addressed with the aim of combating employment condition-based unfair competition. It is for this reason that the employed person’s tax credit is being increased whereas the sole trader’s tax credit from 2020 onwards is being ratcheted down – in eight consecutive steps of 250 euros each followed by one final step of 280 euros – from its current level of 7,280 euros to 5,000 euros by 2028.
The supply and lending of books, newspapers and magazines/journals on physical carriers is to come under the reduced value-added tax rate (of 9 rather than 21 percent), as is the granting of access to the news web sites of newspapers, journals/magazines and journalism research platforms.
2020 Miscellaneous Tax Measures
This Bill contains a proposal aimed at publicising negligence penalties imposed on co-perpetrating practitioners who have been found to have facilitated tax evasion or benefit fraud. The Bill is moreover introducing an optional scheme aimed at enabling electronic messaging between the tax payer and the Tax and Customs Administration, to give the tax payer a choice between paper-based and digital communication with the tax authorities. Finally, the Bill sees to the implementation of the WLTP (Worldwide Harmonised Light Vehicle Test Procedure) method for motor vehicle and motorcycle tax purposes.
Tax Measures (National Climate Agreement) Bill
This Bill contains certain tax measures in the (constituent) areas of mobility, built-up environment and waste. Foreign waste is being rendered liable for waste (collection) taxation. A one-off increase by 10 million euros is to be made to the environmental investment allowance in 2020, in addition to which several circular operating resources are temporarily being added to the Environmental List.
2021 Withholding Tax Bill
This Bill sees to the introduction effective 2021 of a contingent withholding tax charge on interest and royalty payments to low-tax jurisdictions and in abuse scenarios, to stop the Netherlands continuing to be used as a conduit for transfer operations to low-tax jurisdictions.
Abolition of Tax Deduction (Education Expenses) Bill
The current regime governing tax deduction for education expenses is being abolished in favour of the STAP (= Enhancement of Employment Market Position) Budget Subsidy Scheme, whose ultimate aim it is to improve the deployment in terms of efficacy of available educational resources.
Bill providing for the implementation of the EU Directive as regards the Harmonisation and Simplification of (certain rules in the value added tax system for the taxation of) Trade between Member States
This Bill – as its admittedly rather lengthy name suggests – contains a number of adjustments having been prompted by the EU Directive as regards the harmonisation and simplification of (certain rules in the value added tax system for the taxation of) trade between Member States.
Dutch version: Belastingplan 2020