What important tax proposals for entrepreneurs did the Minister of Finance, Sigrid Kaag, pull from her briefcase on Prince’s Day 2022? An explanation of the ten most important ones is provided below.
1. Increase of more than 10% in minimum wage
With effect from 1 January 2023 the minimum wage will increase by more than 10% in one step. As the old-age pension and social assistance benefits are linked to this, they will also rise proportionately.
2. Increase in fixed budget under work-related expenses scheme
The work-related expenses scheme allows you as an employer to grant your employees all kinds of allowances and benefits in kind free of tax. The fixed budget under the work-related expenses scheme is being increased from 1.7% up to a wage bill of € 400,000 in 2022 to 1.92% up to a wage bill of € 400,000 in 2023. For the part of the wage bill above € 400,000 the fixed budget will amount to 1.18%. If you exceed this fixed budget, you have to pay 80% tax via the final levy in your payroll accounting.
3. Higher customary salary
As a director/major shareholder (DGA), you have an obligation to award yourself a customary salary and include it in your company’s payroll accounting. By law, in 2022 this customary salary must be set at least at 75% of the salary for the most comparable position or at the level of the highest salary received by the employees of your company, if one of these amounts exceeds € 48,000.
As the salary for the most comparable position is difficult to determine, a so-called efficiency margin of 25% applies. This efficiency margin is being abolished with effect from 2023. It is therefore possible that, from 2023 onwards, you will have to award yourself a higher salary as a director/major shareholder.
4. Rise in corporation tax rates
Corporation tax rates are rising and the tax bands are being narrowed. From 1 January 2023 the rate applicable up to a taxable profit of € 200,000 will be 19%, with profits above this taxed at 25.8%. This means profits will more quickly fall into the top band of 25.8%. The reason for the increase is to collect more tax from profitable companies in order to reduce the burden on citizens and increase their purchasing power.
|Profit up to € 395,000 in 2022/€ 200,000 in 2023||15.0%||19.0%|
|Profit above € 395,000 in 2022/€ 200,000 in 2023||25.8%||25.8%|
5. Lower income tax rates and higher tax credits
The rate applicable in the 1st band is being lowered slightly: from 37.07% (2022) to 36.93% (2023). This 1st band is also being widened to € 73,071 (€ 69,398 in 2022). Tax credits are being increased.
|Income tax rate/national insurance contributions for 2023|
|Taxable income of more than (€)||but no more than (€)||Rate for 2023 (%)|
The employed person’s tax credit is also being raised from 1 January 2023 with the aim of improving purchasing power.
6. Two rates for substantial shareholdings
Do you hold more than 5% of the shares, profit-sharing certificates or voting rights in a company? If so, you are considered to be a substantial shareholder. The income you receive from this holding, such as dividends, is taxed in box 2 for income tax purposes. At the moment the applicable rate is 26.9%.
The government is planning to introduce two bands in box 2 with effect from 2024, namely 24.5% up to € 67,000 and 31% for the excess amount.
In 2023 the rate for box 2 will remain as it was in 2022: 26.9%.
7. Box 3 rate to increase incrementally
The rate in box 3 will increase incrementally. In 2023 the applicable rate will be 32% (currently 31%). The rate in box 3 will then rise by 1% in 2024 and 2025, to 33% and 34% respectively.
To cushion the impact for small savers, the tax-free allowance will increase from € 50,650 to € 57,000 with effect from 2023.
Lastly, following the Supreme Court’s ‘Christmas judgment’, and the reparations due as a result, the tax base in box 3 will be adjusted. The Tax and Customs Administration will take the actual distribution of your assets between three asset groups as a basis:
- Bank balances
- Other assets (including investments and immovable property)
8. Increase in transfer tax for companies and investors
The transfer tax applicable to property that cannot be regarded as the buyer’s own home (in short: investment property) is increasing from 8% to 10.4%. On balance, this means that companies and investors, as well as people who buy or let a holiday home, will pay more transfer tax.
9. Increase in vacant value ratio
The vacant value ratio is a rent-dependent factor used to calculate the value of a fully or partially let property whose tenant has security of tenure. This is being increased with effect from 1 January 2023. As a result, the value of a let property in box 3 will go up, meaning that the landlord will have to pay more tax in box 3. This change will also have an impact on gift and inheritance tax.
In addition, two further changes are being made:
- With effect from 1 January 2023, temporary tenancy agreements will be excluded from application of the vacant value ratio.
- If the property is being let to related parties (such as a son or daughter), the vacant value ratio cannot be applied.
Please note: The vacant value ratio does not apply to holiday homes or non-residential properties.
10. Reduction and abolition of tax exemption for gifts to assist with purchase of own home
The tax exemption for gifts made to assist a person with the purchase of his or her own home (also known in Dutch as the ‘jubelton’) will be abolished entirely from 1 January 2024. This exemption currently amounts to € 106,671 (2022) and applies to recipients aged between 18 and 40. In anticipation of its abolition in 2024, the exemption will be reduced to € 28,947 from 2023.
Energy support package for entrepreneurs?
For households, alongside the package of measures intended to increase purchasing power, the government has also announced a price cap for electricity and/or gas, up to a certain level of consumption. In addition, the Minister of Economic Affairs and Climate Policy, Micky Adriaansens, has announced that a support package for entrepreneurs will be introduced around November. It is not yet clear what these plans will look like.