Amended Budget for Netherlands 2014 presented

On 11 October 2013, the Netherlands government presented an overview of the amended Budget for 2014. The amended Budget includes amendments to some of the tax measures previously announced on 17 September, and also introduces some new measures.

The main tax measures provided by the amended Budget are the following:

Income tax

(a) Self-employed person’s deduction:

  • The planned reduction in the self-employed person’s deduction will not be implemented; and
  • A substantial shareholder is deemed to enjoy a minimum salary (currently EUR 43,000). Subject to certain conditions, the deemed salary may deviate by up to 30% from what is considered a “normal salary”. The amended Budget provides for the adjustment of this percentage from 2015.

(b) Tax rates:

  • The tax rate of the first bracket will be reduced; and
  • The tax rate for income from shares forming all or part of a substantial shareholding will be reduced from 25% to 22%.

(c) Tax credits:

  • Under the original Budget for 2014, the general levy rebate was to be phased out for incomes falling in the top bracket. Under the amended Budget, this phasing out has been abolished; and
  • The working bonus, a credit granted to taxpayers aged 60-63 at the start of a calendar year and who derive income from employment or other (business) activities will be abolished for new cases as from 1 January 2015.

 Payroll tax

The contributions due by the employer for the unemployment insurance and the disability fund will be reduced.

VAT

The application of the reduced rate of 6% on the rebuilding, renovation and repair of owner-occupied dwellings (including the expenses of architects, gardeners) will be extended to 31 December 2014 (originally 1 March 2014).

Other taxes

  • The planned reduction in the motor vehicle tax will not be implemented;
  • The tap water tax for companies will be increased; and
  • A tax on the dumping of waste will be reintroduced.

The measures outlined above will generally apply as from 1 January 2014, unless otherwise indicated.