Netherlands: The Dutch Spring Memorandum (Voorjaarsnota)

In brief

On 20 May 2022, Dutch government published its yearly Spring Memorandum (Voorjaarsnota), containing an update of the budget for 2022, and the government’s tax plans for 2023 and beyond. The Spring Memorandum sets out the administration's policy intentions. These will then be debated in the Dutch Lower House, after which they may be converted into a draft bill. The draft bill should then go through the regular parliamentary process before being adopted into law.

Below, we summarize the most important measures proposed with respect to Dutch wage and income tax law.

Wage Tax 

Tax-free travel allowance

The coalition agreement of 15 December 2021 had proposed an increase of the tax-free travel allowance. This increase is brought forward by one year. The amount of the increase is not yet clear, but it will presumably rise to EUR 0.21 per business kilometer next year, and EUR 0.23 per business kilometer in 2024. Currently, employers can reimburse EUR 0.19 per business kilometer free of tax.

30% facility

 The 30% facility is a Dutch tax benefit that is available for a particular group of employees (often called expatriates), who have been recruited from abroad to work in the Netherlands. Based on this facility, 30% of the Dutch taxable wages may be paid out as a tax-free compensation for so-called extraterritorial costs during maximally five years, provided additional conditions are met. The Dutch government proposes to limit the maximum wages on which the 30% facility can be applied. This maximum could coincide with the so-called Prime Minister’s salary norm (Balkenendenorm), which in 2022 amounts to EUR 216,000 gross per year. If approved, this measure would be phased in over a three-year period starting in 2024.

Income Tax 

Box 2

For the taxation of so-called substantial shareholdings (i.e., briefly stated: 5% or more of any class of shares in a company, also known as ‘Box 2’ tax), the administration intends to introduce two tax brackets as from 2024. The first bracket should have a basic rate of 26% on the first EUR 67,000 of income per taxpayer, and the second bracket 29.5 % on the excess amount.

In addition, the Dutch government proposes to reduce the so-called efficiency margin for determining the usual wages that have to be paid out as a taxable benefit to director-major shareholders (DGAs) each year. The efficiency margin allows DGAs to be paid a taxable benefit that is a certain percentage lower than the wages considered normal for the level and duration of the DGAs employment. This margin will be reduced from 25% to 15%, as a result of which the tax burden on the DGAs employment income ("‘Box 1’ tax") should increase.

Box 3 

The Dutch Supreme Court recently ruled that the Dutch deemed capital yield tax ("‘Box 3’ tax") results in a breach of the First Protocol of the European Convention on Human Rights and article 14 of the European Convention on Human Rights. The 2022 Spring Memorandum confirms that taxpayers who lodged a timely objection against their Box 3 tax assessments for 2017, 2018, 2019 and / or 2020 ("qualifying Box 3 tax assessments"), should be compensated according to the so-called savings variant. This involves a revised calculation of their deemed taxable return in Box 3, based on the actual composition of their Box 3 assets. The savings variant works with three separate deemed incomes: (1) from savings, (2) from debts and (3) from other assets. For savings, the savings interest rates for the years 2017 through 2022 should be used, for debts the mortgage interest, and for other assets, the multi-year average return for investments. The compensation will also be extended to qualifying Box 3 tax assessments that are not final yet. Taxpayers who have timely objected against qualifying Box 3 tax assessments, but do not agree with the proposed compensation, can submit an official request to the tax authorities for a (further) tax reduction. A decision is still pending as to whether compensation will be granted to taxpayers who have not, or not timely objected against qualifying Box 3 tax assessments at all.

The coalition agreement of 15 December 2021 had proposed a measure to increase the tax-free amount for Box 3 in three steps from EUR 50,650 at present to approximately EUR 80,000 eventually. This increase will however be cancelled.

Fiscal old-age reserve

Based on the so-called fiscal old-age reserve (FOR), persons who are entrepreneurs for Dutch income tax purposes can currently build up an old-age pension in a tax-facilitated manner, provided certain conditions are met. The administration however intends to abolish this FOR as of 1 January 2023, whereby any FOR that has already been built up could still be settled on the basis of the current rules.

Tax credits

General tax credit

In addition to income from Box 1, as of 2025 income from boxes 2 and 3 may also reduce the general tax credit. As a result, people whose income mainly falls in Box 2 or Box 3 may be granted a lower reduction on the amount of taxes payable.

Elderly persons’ tax credit

The coalition agreement of 15 December 2021 had proposed an increase in the elderly persons’ tax credit. However, this increase will be cancelled, which should mainly affect the elderly with a (high) middle income. The lowest income earners generally do not redeem any elderly persons’ tax credit, and the highest income earners are normally not entitled to the elderly persons’ tax credit.


Contact Information
Don-Tobias Jol
Partner at BakerMcKenzie

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