Please note! Most of these proposals still have to be approved by Parliament. They will only become definitive after voting has taken place in the Upper House at the end of December.
1. Increase in the reduced rate of VAT
The reduced rate of VAT is expected to rise from 6% to 9%. This reduced rate mainly applies to basic necessities, such as food and drink. However, books, magazines, bicycle repairs, hairdressing services and most purchases from catering establishments also fall under the reduced rate.
2. Reduction in the rate of the Energy Investment Allowance
The Energy Investment Allowance (EIA) is being reduced from 54.5% to 45%. You are entitled to the EIA if you invest in energy-efficient technologies included on the Energy List. Applications for the EIA can be made at rvo.nl. Your investment must have a value of at least € 2,500. The time when the investment is made is decisive, so it is worth placing your orders this year.
3. Increase in fixed addition for private use of electric company cars
The addition to taxable income for the private use of fully electric company cars is 4%. From 2019 this percentage will only apply to the first € 50,000 of the list price. More expensive electric cars will be subject to the normal addition of 22% on the remainder of the value above the list price. In principle, the addition is applicable for five years from the time of purchase. That means that if you purchase an electric car in 2018 that costs more than € 50,000, you can continue to benefit from the lower addition to taxable income on the full list price for five years, assuming the relevant legislation does not change in the meantime.
4. Reduction in corporation tax rates by 1 percentage point
Next year, in accordance with the coalition agreement, corporation tax rates will be lowered by 1 percentage point. From 2019 the rate applicable to the first € 200,000 of profit will therefore be 19% instead of the current rate of 20%. If your profit exceeds € 200,000, you currently pay 25% on the remainder. This will be reduced to 24% next year. These rates will be cut again in 2020 and 2021 by a further 1.5 percentage points per year and in 2021 will therefore stand at 16% and 21% respectively. However, due to the debate on the abolition of dividend tax, further changes to these rate reductions cannot be ruled out.
5. Reduction in level of depreciation permitted for commercial property
From 2019 a company’s property that is used for its own purposes may only be depreciated down to 100% of its WOZ value (value for the purposes of the Valuation of Immovable Property Act). At present such property can be depreciated down to a level of 50% of the WOZ value. This measure does not apply to entrepreneurs who are subject to income tax and is intended as a counterpart to the overall reduction of 4 percentage points in the corporation tax rates (see point 4).
6. Reduction in level of notional rental value to 0.55%
For homes with a value of between € 75,000 and € 1,060,000 the notional rental value (EWF) is currently 0.7% of the WOZ value. This percentage is being reduced to 0.55%. However, as house prices have risen so sharply, homeowners will not necessarily experience a corresponding reduction in the tax burden.
7. Reduction in rates in box 3
For some time now the rates in box 3 have been more in line with the returns actually achieved on savings and investments. Next year the significantly lower interest rates will therefore be reflected in the rates in box 3. For this year the tax authorities are taking a return on savings of 0.36% as a basis. In 2019 this is expected to drop to 0.13%. This assumed return of 0.13% on savings also means that tax on the imputed return on investments will also be lower. For savers with taxable assets of up to € 70,800, this will mean a maximum tax saving of € 33 per year. In the case of assets above this threshold the difference could amount to up to € 175. This is based on the assumption that the presumed return on investments does not change.
8. First step towards abolition of deduction for persons with no or little home acquisition debt
At present, if you do not have any tax-deductible mortgage interest, you also do not have to declare a notional rental value. This facility will be phased out in proportionate steps over the next 30 years, starting in 2019.
9. Reduction in mortgage interest relief to 49%
Next year the maximum rate at which mortgage interest can be deducted will be 49% (currently 49.5%). The rate of this gradual reduction will accelerate by 3 percentage points per year over subsequent years to reach a level of around 37% in 2023.
10. Changes to energy tax
The energy tax payable on natural gas and electricity is changing to more accurately reflect the applicable CO2 emissions. The rates in the first energy tax bracket for natural gas will be increased by 3 eurocents, while those in the first bracket for electricity will be reduced by 0.72 eurocents.