The new Dutch government published its Policy Paper on 10th October 2017. The paper highlights the policy of the new Dutch government for the next four years. The new four-party coalition government was formed after extensive negotiations after the elections on 15 March 2017. The new government aims the policies to come into effect in 2019, the legislative proposals are expected to be submitted to parliament during the course of 2018.

The main proposals include:

Corporate income tax rate:

The corporate income tax rate currently is 20% on the first EUR 200,000 of taxable profits, and 25% on taxable profits above that amount. The new Government proposes to lower the current standard corporate income tax rate from 25% to 24% in 2019, to 22.5% in 2020 and to 21% as from 2021 and also proposes  to lower the step-up rate from 20% to 19% in 2019, to 17.5% in 2020 and to 16% as from 2021.

Withholding tax:

As from 1st January 2020 the new government intends to eliminate the 15% dividend withholding tax. In addition the government intends to introducing a withholding tax on interest and royalty payments made to countries with very low tax rates (currently, no withholding tax is applied on interest and royalties in any case).

Interest deduction limitation rules:

Introducing interest deduction limitation rules in accordance with the EU Anti-Tax Avoidance Directive which includes a general 30% of EBITDA limitation with a EUR 1 million safe harbor threshold, moreover a rule for banks and insurers limiting interest expense deductions on debt exceeding 92% of the total commercial balance sheet value.

Carry forward:

Limiting the allowed carry forward of losses from 9 years to 6 years.

Incentives:

The Innovation Box offers taxpayers a special tax regime for income related to qualified R & D activities. This tax rate innovation box is increased from 5% to 7%.

VAT:

The new government has also intends to increase the low VAT rate from 6% to 9%.

Direct real estate investments:

According to the new proposal, fiscal investment institutions are no longer authorized to directly invest in real estate.