On October 26, 2023, the Dutch Second Chamber of Parliament adopted 17 amendments to the tax regime of the Netherlands. Of these, the Minimum Profit Tax Act 2024, the 2024 Tax Plan package and the Tax Miscellaneous Provisions Act 2024 will have the most significant impact on businesses and expats in the country. Read on to learn how these changes can affect your business.
The most important amendments for foreign nationals earning in the Netherlands are:
Private Limited Companies and DGAs
In the plan for 2023, the income tax rate for Box 2 was split into two brackets:
- For those with income up to €67,000 (double the amount for partners)
- For those with income above the €67,000 threshold.
While the first bracket rate is unchanged at 24.5%, the rate for the second bracket has been raised from 31% to 33%. Plus, this rate also applies to the reserves in the book value.
Income Tax – Employees
In a bid to leverage targeted tax measures by balancing revenues and additional spending, and contributing towards climate goals, the rate for Box 3 has also been increased. It was previously announced at 34% for 2024 and beyond. However, according to the latest change, the rate now stands at 36%. However, green investments under Box 3 are set to be reduced from 2025.
Income Tax – Entrepreneurs
The exemption for SME profit was to be reduced from 14% to 12.7%. Although it has been reduced to 13.31%, analysts say this is merely a Band-Aid taking into account the above tax increases.
Changes in the Business Succession Scheme (BOR)
According to the new Tax Plan, the 100% exemption for BOR will be increased from €1.2 million to €1.5 million. The catch here is that the assets above the new limit will only be 70% exempted, instead of the previous 83%. However, this rate is expected to be changed to slightly below 75% from 2025.
The rules for classifying limited partnerships, foreign legal entities and Dutch FGRs (fondsen voor gemene rekening, a pooled investment vehicle) have also been revised. The new guidelines will be applicable from January 1, 2025. According to the amendment to abolish partial foreign tax liability, the 30% ruling will be scaled back to 10% in 5 years for new applications. For those already using this, a transitional agreement allows the liability to be extended to 2026 at the maximum.
What Does This Mean for You?
Stricter audits and greater control over non-profit organizations’ special corporate tax regimes are the hallmarks of the Netherlands budget for 2024. This necessitates higher compliance vigilance to prevent any taxation or legal troubles in the future.
While hiring, businesses will need to identify whether the hired employees are liable to a 30% ruling and will have to implement the same in the payroll. Self-employed freelancers will also need to gauge which segment they fall under. Further, the arrangements are transitional, which means you should keep an eye on any amendments that need to be followed till the policy is finalised.
Navigating complex payroll, immigration and taxation laws can add to the administrative burden for international employees, contractors and business owners. Access Financial, with 20 years of global experience, specialises in customised and compliant solutions for businesses that employ staff overseas, as well as for contractors seeking job opportunities in their home and abroad. Leveraging the services of an experienced payroll and umbrella services provider can help mitigate tax liabilities and ensure compliance with local laws.
Access Financial works to boost take-home income, minimise administrative overheads and streamline compliance and payroll management while ensuring data security and confidentiality for your business. Get in touch with the experts today.