The Netherlands lower house of Parliament has approved the 2025 Tax Plan with some amendments on 14 November 2024.

The amendments include changes to the EBITDA interest deduction limitation, anti-fragmentation rule for real estate companies in relation to the interest deduction limitation, reduction of exemption for “green investments”, and the cancelation of the proposed VAT rate increase, amongst a few others.

The highlights of the main amendments are as follows:

Increase in the EBITDA interest deduction limitation

The increase in the EBITDA interest deduction limit has been approved at 24.5% from the initially proposed 25% in the Tax Plan.

The anti-fragmentation rule for real estate removed

The proposed anti-fragmentation rule in the 2025 Tax Plan concerning interest deduction limitations for real estate companies has been eliminated.

Business donation tax deduction removed

  • Starting in 2025, businesses will no longer be able to deduct donations for corporate tax purposes.
  • The maximum deduction under the Income Tax Act will increase from EUR 250,000 to EUR 1 million.

Cancellation of the proposed VAT rate 

The government has agreed to abolish the proposed VAT rate hike from 9% to 21% on cultural goods and services.

Green investment exemptions

  • The Box 3 exemption for “green investments” will be lowered by EUR 4,000 per taxpayer. The current maximum exempt amount is EUR 71,251.
  • The extra tax credit for these investments will decrease from 0.7% to 0.1% of the exempt amount.
  • Both the exemption and the credit will be abolished in 2027.

The 2025 Tax Plan will be presented to the upper house of parliament, and a vote on the tax plan package is scheduled for 17 December 2024.

If approved, the amendments will become effective on 1 January 2025.

This follows the government’s presentation of the third amending bill to the Tax Plan 2025 to the lower house of parliament on 6 November 2024.

Earlier, on 17 September 2024, the Netherlands presented the 2025 Budget, including the 2025 Tax Plan, to the House of Representatives.