On 5 October 2021, the amendments to the “2020 Tax Plan” were presented to the lower house of Parliament of the Netherlands. Further amendments to the “2022 Tax Plan” were presented on 15 October 2021 to the lower house of Parliament. The summary of amendments concerns the following:
CIT rate
One proposal would increase the top corporate income tax (CIT) rate to 25.8% from 25% for taxable amount more than €395,000, effective from 1 January 2022. The lower income tax rate of 15% for profits up to €395,000 (as of 1 January 2022) would be maintained.
Interest deduction limitation
Another proposal would tighten the generic interest deduction limitation for corporate income tax purpose. At present, this interest deduction limitation means the interest, on balance, payable by a taxpayer can only be deducted up to 30% of the earnings before interest, taxes, depreciation, and amortization (EBITDA) for tax purposes, or up to €1 million if that is higher.
- As proposed, the interest payable on balance would only be deductible up to 20% of the EBITDA for tax purposes.
- The threshold of €1 million remains unchanged.
- The measure would apply for the first time to financial years beginning on or after 1 January 2022.
