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Dutch Senate Approves Tax Plan

by Ulrika Lomas,, Brussels

23 December 2019

On December 17, 2019, the Dutch Senate approved numerous tax measures as part of the 2020 Tax Plan, including changes to corporate, individual, and value-added taxes.

Corporate tax

Under the plan, the corporate tax rate on income of EUR200,000 (USD223,000) or less will fall from 19 to 16.5 percent in 2020, with the tax rate on income in excess of EUR200,000 to remain at 25 percent next year.

The plan also implements the second European Union Anti-Tax Avoidance Directive (ATAD 2) concerning hybrid mismatches effective from January 1, 2020. This law addresses hybrid mismatches with regard to non-EU countries, given that intra-EU disparities are already covered by the first anti-tax-avoidance directive adopted in July 2016.


The rate of VAT on digital publications will be reduced from 21 to nine percent effective from January 1, 2020. This will apply to downloadable audio books, sheet music, teaching materials, e-books, newspapers, and magazines, including those requiring subscriptions.

Broad changes are also being made to the special VAT scheme for small businesses (kleineondernemersregeling or KOR). Presently businesses receive VAT relief if their annual VAT liability, after input tax credits, is less then EUR1,883. Specifically, they may not be required to remit that VAT to the agency or only a limited portion.

Under the changes, the eligibility conditions will be changed. Instead a new scheme will be offered to businesses whose turnover is less than EUR20,000. Businesses that apply for the regime will no longer have to file VAT returns, issue VAT invoices, or charge VAT. However, they cannot reclaim VAT incurred on their inputs.

Personal income taxes

The 2020 Tax Plan sets income tax at 37.35 percent on income up to EUR68,507, with the excess taxed at 49.5 percent from January 1, 2020. Also, the self-employment deduction will be reduced from EUR7,280 to EUR7,030 effective January 1, 2020. The Government intends to reduce this deduction in stages to EUR5,000.

Furthermore, the mortgage interest deduction will be gradually reduced from 2020 for those with incomes in excess of EUR68,507.

Vehicle taxation

The Tax Plan extends existing incentives for the purchase of electric vehicles. As a result, buyers of these vehicles will be exempt from the purchase tax and motor vehicle tax until 2025. Without these changes this scheme would have expired in 2021.

Additionally, owners of old diesel cars will pay a 15 percent surcharge on the motor vehicle tax from January 1, 2020.

TAGS: environment | VAT rates | VAT special schemes | tax | small business | business | value added tax (VAT) | Netherlands | interest | vehicle tax | law | self-employment | transfer pricing | individual income tax | Europe | Tax | BEPS

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