16-12-2021

Alert | Coalition Agreement in the Netherlands

After breaking the national record for the longest government formation negotiations following national elections, four coalition parties (Liberal Conservatives, Liberal Democrats, Christian Democrats and the Christian Union) have presented this week their coalition agreement. The new cabinet led by Mark Rutte is expected to be appointed early January. With the slogan ‘Looking out for one another and looking forward to the future’ the coalition proposes an ambitious policy plan with unprecedented investments to secure a sustainable prosperous country for current and future generations. The coalition agreement will be worked out by Ministers in so-called coalition programs on key policy areas such as nitrogen, climate, labor market and education. This update addresses several plans for policy changes relevant for Employment, Real Estate and Tax.

Employment

EUR 500 mln per year will be invested in reforming the labour market. Differences between permanent and flexible labour will be reduced;
The coalition agreement includes a number of measures aimed at, inter alia, reducing economic inequality and imbalances on the labour market. One such measure is to mitigate the difference between indefinite and fixed-term/flexible employment contracts. The government intends to more strictly regulate on-call contracts, temporary agency contracts and fixed-term employment contracts. The coalition agreement also pays mind to self-employed workers: the online module parties can currently use to help determine the nature of their (intended) contractual relationship will be developed further. The government also plans to more strictly enforce the existing regulations in cases where false self-employment is suspected. Further, the statutory minimum hourly wage will be based on a 36-hour workweek and will incrementally be increased by 7.5%;
Increase of the tax free home-work travel allowance as from 2024.

Real Estate

Housing construction will be accelerated to around 100,000 homes per year. A dedicated Minister will support municipalities and provinces in determining housing locations. Focus will be on starters, seniors and middle-income earners. The government will make a total of EUR 7.5 bln available in the next 10 years for proper accessibility of new housing in 14 urbanization areas and beyond;
The landlord levy will be abolished;
Withdrawal of gift tax exemption to stimulate acquisition of first residential property effective 2024;
Increase of real estate transfer tax as per 2023 from 8% to 9% for acquisition of non-residential property and residential property when not being self-used by acquiror;
Mid-rental housing will receive a form of rent protection;
Introduction of a reporting obligation, registration obligation or rental permit to target non bonafide landlords;
leased real estate in box 3: As of 2023, the vacant value ratio will be abolished. In the new box 3 system, savings and investments will be taxed directly on the real return; the value development of real estate will initially still be taxed at a fixed rate, with the switch being made as quickly as possible to actual return;
incentives to encourage landlords to make rental properties with poor insulation more sustainable. In the long term, homes with poor insulation may no longer be rented out.

Tax

The Netherlands commits itself to strengthen businesses and ensure a stable and predictable investment climate;
It wishes to continue its front runner role in combatting tax evasion and taking a leading role in the EU;
OECD Pillar 2 proposals will be introduced;
The Netherlands will be working on a digital services tax, aviation tax, CO2 border tax
Facilitators of money laundering will be tackled more firmly;
Business succession facilities for gift- inheritance and personal income tax purposes will be adjusted.