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Dutch Parties Agree Personal Income Tax Reform

by Ulrika Lomas, Tax-News.com, Brussels

04 October 2017


The four political parties attempting to form a new government in the Netherlands have reportedly agreed to simplify the personal income tax system.

According to state broadcaster NOS, the parties, which include Prime Minister Mark Rutte's VVD, D66, ChristenUnie, and Christian Democrats, have agreed to pare down the personal income tax regime from four brackets to two.

At present, personal income is taxed at progressive rates up to 52 percent, which applies to income exceeding EUR67,072 (USD78,720).

Under the coalition agreement, there would be two brackets of 37 percent on income up to EUR68,000, and 49.5 percent on income exceeding this threshold.

The plan, which will benefit many middle and high-income employees, is intended to remove a disincentive to work more as a result of high marginal tax rates.

The changes are expected to reduce tax revenue by EUR5bn, but this could be offset by possible increases in value-added tax on supplies of certain goods and services.

Changes to the mortgage interest deduction, reducing the benefit for mainly wealthy taxpayers, are also expected.

Discussions on a new program for government have been ongoing since the March 2017 parliamentary elections produced no overall winner. It is understood that the parties will formally announce the coalition agreement in the coming days.

TAGS: tax | Netherlands | interest | employees | tax rates | individual income tax | services

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