This alert discusses the most relevant changes in Dutch tax legislation applicable per 1 January 2024 and upcoming years, with a focus on rules relevant for cross border corporate structures and internationally oriented companies.
We already informed you about the proposed legislative changes
for the occasion of Budget Day by way of our tax alerts dated
20 September 2023, 31 October 2023, 3 November 2023 and
21 December 2023. Besides the proposals sent
on Budget Day, also other changes which are relevant for CIT payers
involved in cross border corporate structures entered into effect
on 1 January 2024, such as the increase of the scope of the
conditional withholding tax (CWT) to distributions (e.g. dividends)
and the applicability of CWT to recipients having a tax presence in
certain tax treaty jurisdictions. Also, certain other legislative
proposals are summarized which entered into force on 1 January 2024
or are expected to enter into force from1 January 2025 onwards.
Rules changed on 1 January 2024
Minimum tax act 2024
The minimum tax act 2024 requires large multinational enterprises
with an annual turnover exceeding EUR 750 million to be subject to
15% minimum corporate income tax due to the so-called OECD Pillar 2
project. The Minimum tax act 2024 enters into force on fiscal years
starting on or after 31 December 2023 and therefore effectively in
general per 2024. For more information regarding Pillar Two, we
refer to one of our previous articles.
Conditional withholding tax on dividends
The Dutch legislator implemented the CWT on interest and royalty
payments to affiliated beneficiaries located in low-tax and
non-cooperative jurisdictions per 2021 and abusive situations. Per
1 January 2024, the CWT is also applicable on dividend payments.
Furthermore, the CWT applies to tax treaty jurisdiction insofar the
tax treaty allows the Netherlands to withhold tax. Finally, an
amendment has been made to the CWT rules regarding the tax
classification of limited partnerships based on which the envisaged
new tax classification rules applicable on 1 January 2025 can
already apply from 1 January 2024 onwards. For more information,
reference is made to our alert of 3 November 2023.
Excessive borrowing from private company
A Dutch company that (in)directly provides a loan to a shareholder
which holds a substantial interest (i.e. 5% or more) will be deemed
to be a fictitious regular benefit for personal income tax purposes
in box 2 insofar the loan exceeds a certain maximum amount. As per
1 January 2024, the maximum amount has been decreased to EUR
500,000 from EUR 700,000 in 2023. For more information, reference
is made to our alert of 31 October 2023.
Dividend stripping rules
The Dutch legislator aims to further prevent abuse of dividend
stripping. The new rules include a reversal of the burden of proof
from the Dutch tax authorities to the entity that reclaims the
dividend tax in case of a claim for a tax credit or refund of
withholding tax of at least EUR 1,000 per book year or calendar
year and in case of the application of the Dutch dividend tax
exemption. For more information, reference is made to our tax alert
of 20 September 2023.
Update Netherlands blacklist of low-taxed
jurisdictions
On 29 December 2023, the Dutch legislator issued an updated list
with countries which are regarded as low-tax or non-cooperative
(so-called Netherlands blacklist). It was decided to add Antigua
and Barbuda, Belize, Russia and the Seychelles and to remove the
United Arab Emirates. For more information, reference is made to
our tax alert of
9 January 2024.
Limitations of 30% facility
The 30% facility covers a tax-free rate for wage taxes for expats.
Per 1 January 2024, this scheme may be applied up the maximum
amount under the Standards for Remuneration Act (EUR 223,000 in
2023). Furthermore, the 30% facility will be scaled back to 20%
after 20 months once the 30% facility will be applied from 1
January 2024 onwards. If an employee would start utilizing the
facility on 1 January 2024, the facility will therefore be scaled
back to 20% from 1 September 2025 onwards. The facility will be
further scaled back to 10% again after 20 months. The limitations
do not apply to applicants who already applied the 30% ruling
before 1 January 2024.
Business succession scheme
The legislator adopted several changes to the current business
succession scheme (in Dutch: BOR) with respect to inheritance tax
and personal income tax. Per 1 January 2024, immovable property
leased to third parties will no longer qualify as business assets
and therefore qualify as investments assets which are out of scope
for the BOR. Per 1 January 2025, the 5% efficiency margin for
investment assets will be removed. Under this margin, investment
assets up to 5% of the value of the business assets will be
considered as business assets and therefore qualify for the BOR.
Also, per 1 January 2025, the employment obligation will be
removed. This obligation stated that the successor should be
employed in the company which shares are acquired for three years
to qualify for the BOR. In addition, the 100%-exempt amount will be
increased from EUR 1.2 million to EUR 1.5 million. The surplus of
EUR 1.5 million will be exempt for 75%, instead of the current rate
of 83%.
Extension of business investment incentives
The business investment incentives Energy Investment Deduction
(EIA), Arbitrary depreciation of environmental investments (VAMIL)
and Environmental Investment Deduction (MIA) should expire per 1
January 2024, however, due to positive outcome from the evaluations
of these schemes, the application of the incentives are extended
until 1 January 2029. The percentage of deduction for the EIA is
reduced from 45.5 to 40% per 1 January 2024.
Personal income tax rates
Box 2 of the personal income tax consists of income derived from
substantial interest (i.e. 5% or more) and was taxed at a rate of
26.9% up and until 2023. Per 1 January 2024, box 2 has two
brackets. The first bracket – income up to EUR 67,000 –
will be taxed at a rate of EUR 24.5%. The surplus of EUR 67,000
will be taxed at a rate of 33%. The tax rate from income derived
from savings and investment (box 3) increased from 32% to 36% on 1
January 2024. The tax-free amount of box 3 income remains EUR
57,000 (EUR 114,000 for taxpayers with a tax partner).
Rules (expected) to be changed on 1 January 2025
Partial non-resident taxation
An expat which is resident in the Netherlands may currently apply
to be treated as non-Dutch resident for tax purposes. As a result,
the expat would not be taxed on income derived from substantial
interest (i.e. 5% or more) and on savings and income, also known as
box 2 and box 3 income respectively. Per 1 January 2025, expats may
no longer apply for this scheme and expats will therefrom be
treated as regular Dutch tax resident from 1 January 2025. Transit
facilities are in place for expats who already were eligible for
this scheme on 31 December 2023.
Earnings stripping rules
The Dutch implementation of the earnings stripping rules states
that a taxpayer may deduct EUR 1 million of net interest expense
or, if higher, deduct a maximum amount of net interest expenses of
20% of EBITDA. Per 1 January 2025, real estate entities may no
longer deduct net interest expenses up to EUR 1 million but may
only deduct interest expenses up to an amount of 20% of EBITDA.
This legislative change aims to reduce interest deduction by real
estate entities which, according to the legislator, split up in
multiple companies in order to apply the threshold of EUR 1 million
multiple times.
Change tax classification rules
The Dutch tax treatment of limited partnerships (e.g. CVs) will
change per 1 January 2025. CVs will be considered as transparent
for Dutch tax purposes per 2025. The Dutch classification regarding
funds common account (FGR) will also change per 2025 as such that
FGRs will in general be treated as transparent for Dutch tax
purposes, except if it qualifies as investment institution within
the meaning of the Act of Financial Supervision. For more
information, reference is made to out tax alert of June 2023.
VBI/ FBI
Fiscal investment institutions (FBIs) will be subject to regular
corporate income tax rules should the FBI invest directly in Dutch
real estate. FBIs are now, subject to conditions, taxed at a rate
of zero percent. Exempted investment institutions (VBIs) may only
apply for the regime in which it will be exempted from tax if the
entity qualifies as regulated investment institution within the
meaning of the Act on Financial Supervision. Reference is also made
to our tax alert in June 2023.
Repurchase of shares
Currently, repurchasing shares by listed companies are exempt from
the dividend withholding tax. This exemption will be abolished as
from 1 January 2025. However, as stated in our tax alert, the State Secretary of Finance has
promised to present other options in the spring.
Real estate transfer tax
Under current legislation, there is an exemption of real estate
transfer tax (RETT) applicable to share transactions to companies
whose supply is subject to VAT. Such transactions will on 1 January
2025 be subject to 4% RETT. Certain transitional rules apply for
ongoing projects.
Originally published 16 January 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
