2019 Tax Plan published

On 18 September 2018 the Dutch government presented the 2019 Tax Plan. Please find already below some highlights of the proposed tax measures: 

1. To enhance the Dutch tax climate, the nominal corporate income tax (CIT) rate will be reduced in steps from 25% to 22.25% (2019: 24.3%, 2020: 23.9%, 2021: 22.25%). The lower basic rate over the first EUR 200,000 of profit will be reduced from 20% to 16% (2019: 19%, 2020: 17.5%, 2021: 16%).
    
2. Again to enhance the Dutch tax climate, dividend withholding tax will be abolished as of 2020.
    
3. To combat tax avoidance, also per 2020 a conditional withholding tax will be introduced on dividends effectively paid to low tax jurisdictions (<7% CIT) / EU blacklisted jurisdictions and in abusive situations. This conditional withholding tax will only apply to entities (not to private individuals) having (on their own or with others) a controlling influence.
    
4. Further, as per 2021 a conditional withholding tax will be introduced on interest and royalty payments to recipients in low tax / EU blacklisted jurisdictions or in abusive situations.
    
5. In accordance with EU Anti-Tax Avoidance Directive 1, an earnings stripping rule will be introduced. The earnings stripping rule will limit the deductibility of net interest expenses to an amount which is equal to the highest of (i) 30% of adjusted profit, or (ii) EUR 1,000,000.
    
6. Consequently, the interest deduction limitation rules in relation to excessive participation debt and excessive acquisition debt will be abolished. Also the rules which limit holding/financing company loss compensation will be abolished.
    
7. In accordance with EU Anti-Tax Avoidance Directive 1, a controlled foreign company rule will be introduced.
    
8. The tax loss carry forward facility will be reduced from 9 to 6 years, and the depreciation of real estate will be limited to the so-called WOZ value in all situations.
    
9. The duration of the tax free allowance facility for expats will be reduced from 8 to 5 years as of 2019 (without grandfathering).
    
10. There will be various changes to the Dutch personal income tax system, e.g. (i) lowering of the maximum PIT rate to 49.5%, (ii) an increase in several levy rebates, and (iii) taxation of debt of directors/shareholders due to their own entity as dividend income to the extent that the debt exceeds € 500,000 as of 1 January 2022. Finally the reduced VAT rate will be increased from 6% to 9%.

Please note that the proposed legislation still has to be adopted by the House of Representatives and the Senate.

If you have any questions regarding the above, please do not hesitate to contact us.


Do you want to receive news and updates directly in your mailbox? Please subscribe to our newsletter

Or follow us on LinkedIn