Tax Plan for 2015

The Dutch government in its 2015 Tax Plan has presented a string of measures aimed at helping reduce the financial burden in the employment sphere. Now that the new parliamentary year has been well and truly ushered in, the question is warranted whether these measures have turned out anywhere near as spectacular as had been hoped for. This is what the government has come up with.

Income tax

• The first-tier income tax rate has been increased by 0.25% to 36.5%. The second and third tier rates by contrast have remained unchanged from last year.
• The phase-out cap on the employed person’s tax credit has been (sizeably) increased. The aggregate benefit rounds off to € 500 per annum.
• Phase-out of the general tax credit resulting in tax credit forfeiture for incomes in excess of € 20,000.00 p.a. However, as the general tax credit had been on the receiving end of a hefty plus in the Tax Plan for 2014, all in all the general tax credit for incomes up to € 52,000.00 p.a. has topped last year’s.
• Extension from ten to 15 years of the maximum term during which homeowners who are left with a residual debt when they sell their home will still be eligible for interest relief on said residual debt.
• Extension from two to three years definitively of the term throughout which double mortgage interest tax relief will be available to homeowners who have not yet managed to sell their old home.
• The opportunity to realise mortgage interest tax relief for up-for-sale residential properties having previously been temporarily let.

Wage tax

• The moment has finally come for the Work Related Costs Scheme (Dutch acronym: WKR) to be well and truly phased in. Although quite a few WKR details are as yet to be disclosed as part of separate measures, the overhaul of the system underpinning the long-standing allowance and benefit scheme has undeniably got under way.
• The customary pay regulation will be changing for directors cum controlling shareholders. All existing arrangements are to be converted.

Private vehicle (and motorcycle) tax

• The use of valuation reports for private vehicle (and motorcycle) tax purposes when used cars are imported into the country is to be clamped down on. From 2015 onwards valuation reports will only be used for damaged cars and cars that are rarely seen in the Netherlands, whereas a flat-rate chart or commonly used price list will henceforth be used in appraising all other cars.

Value-added tax

• The applicability of the reduced value-added tax rate of 6% (rather than 21%) for renovation and repair work to residential properties is to be extended for another six months, until the first of July 2015.

The 2015 Tax Plan additionally provides for measures that will not come into operation until 2016 and will primarily affect the older taxpayer.

Measures taking effect in 2016

• Abolition of the Box 3 elderly person’s allowance.
• Reduction by € 83.00 each of the elderly person’s tax credit.
• Any motor vehicle whose weight exceeds 3,500 kilogrammes and whose passenger section occupies more space than the cargo section will henceforth come under the higher motor vehicle tax rate for passenger cars, and will be liable for private vehicle tax when purchased.