Budget Day in the Netherlands 2024

7 oktober 2024 | Door:  Susanne Knol - Bongers

2025 Tax Plan for International Entrepreneurs

The 2025 Dutch Tax Plan introduces significant changes that may impact international entrepreneurs. From tax reforms to new regulations, the overview below highlights the most relevant topics for international businesses. Click on the titles for more information on each subject and discover what these changes mean for your business.

Corporate tax rates for 2024 will remain unchanged in 2025
Qualification policy for foreign legal forms
Qualification Dutch limited partnerships (CVs)
The Additional VAT Margin-Scheme lapses as of 2025
VAT: The European Small Business Scheme
30% Ruling: Minus 3%
Transfer Tax Rates
Changes regarding Dutch tax facilities for investment vehicles
Several changes have been announced for the OFGR, VBI, and FBI.
Other developments: FASTER, DAC 8, ATAD 3, Pillar 1

Corporate tax rates for 2024 will remain unchanged in 2025

The rates and tax brackets in the corporate tax will not change compared to 2024.

Corporate tax rates

Taxable amount from                  Taxable amount up to                  Corporate income tax rate

€ 0                                                     € 200,000                                        19%

€ 200,001                                        -                                                          25.8%

Qualification policy for foreign legal forms

At present, foreign legal forms are qualified for income and withholding tax purposes through a comparison of such legal form with Dutch legal forms. If there is no comparable Dutch legal form this can result in international mismatches, where one country considers a legal form as transparent for tax purposes, while the Netherlands consider it as non-transparent (or vice versa). A new law enters into effect on January 1, 2025, that adds two additional methods of qualifying foreign legal forms for taxation purposes:

• Foreign legal forms residing outside the Netherlands will be qualified under the symmetrical approach. This approach qualifies foreign legal forms as non-transparent if the foreign legal form is considered as non-transparent in the country of residence. This ensures consistency in tax treatment between the Netherlands and the foreign jurisdiction.
• Foreign legal forms residing in the Netherlands will qualify as non-transparent.

Qualification Dutch limited partnerships (CVs)

As of January 1, 2025, all Dutch limited partnerships will be considered as transparent for income and withholding tax purposes. Dutch limited partnerships that are considered non-transparent under current regulations will face an exit tax, a tax on unrealized gains. To mitigate negative tax impact various tax facilities can be applied.

Please note: reverse hybrid mismatches with limited partnerships will not face an exit tax and will remain non-transparent for Dutch taxation purposes. 

The Additional VAT Margin-Scheme lapses as of 2025

The Dutch government is implementing the VAT Rates Directive, which adjusts the scope of the additional margin scheme. The implementation of the VAT Rates Directive prohibits the use of the additional margin scheme for resellers who have obtained, imported, or intra-Community acquired antiques, art, or collectibles at a reduced rate.

As of January 1, 2025, the additional margin scheme lapses. Please be aware that you may have purchased art objects under the additional margin scheme without VAT deduction for this supply. As a result, it is possible that you have not resold these items before the VAT Rates Directive takes effect. In this situation, you have the option to utilize your right to deduct VAT in the first tax period of 2025.

VAT: The European Small Business Scheme

From 2025, entrepreneurs in other EU countries can use a European Small Business Scheme (known in Dutch as the KOR). This means that these entrepreneurs do not have to charge (foreign) VAT and are not subject to the associated administrative obligations. However, it is also not possible to deduct VAT on costs when using the KOR.

The key conditions are:

• The total annual turnover of the business in the EU must not exceed €100,000 annually.
• The turnover of the business must not exceed the turnover threshold of the local KOR of the respective member state.

30% Ruling: Minus 3%

In the 2024 tax plan, a substantial reduction of the 30% ruling was announced. This allowance for extraterritorial costs of employees was to be reduced from 30% to 10% over the term of five years. This reduction is now largely reversed. The 30% ruling will only be reduced to 27% starting from January 1, 2027. For the years 2025 and 2026, all employees will be eligible for 30%, while employees who relocated to the Netherlands before 2024 will be entitled to the full 30% ruling for the entire maximum duration of 5 years, in accordance with transitional provisions.

However, the requirements for applying the ruling will be tightened. The salary standard for regular employees will be increased from €46,107 to €50,436, while the salary standard for employees under the age of thirty with a master’s degree will be increased from €35,048 to €38,338.

Transfer Tax Rates

Transfer tax is levied upon the acquisition of real estate located in the Netherlands or rights attached to it. As of 2024, there are three transfer tax rates:

• One for non-residential properties and residential properties not used as the main residence by the acquirer. This is taxed at a rate of 10.4%. From January 1, 2026, the general transfer tax rate for residential properties will be reduced from 10.4% to 8%, except for residential properties used as the acquirer's main residence. For other real estate, the tax rate remains 10.4%.
• One for residential properties used by the acquirer as their main residence. The rate for this is 2%. This rate will not change in 2024.
• For indirect real estate transfers via share transactions, a rate of 4% will apply starting from January 1, 2025.

Changes regarding Dutch tax facilities for investment vehicles

The Netherlands has various tax facilities for investment vehicles. Most commonly known are:

• Fund for joint account
  • Known in Dutch as: open fonds voor gemene rekening (OFGR)
• Exempt investment institution
  • Known in Dutch as: vrijgestelde beleggingsinstelling (VBI)
• fiscal investment institution
  • Known in Dutch as: fiscale beleggingsinstelling (FBI)

Several changes have been announced for the OFGR, VBI, and FBI. In short, the changes are as follows:

FBI
As of January 1, 2025, FBIs may no longer invest directly in Dutch real estate. It remains possible for FBIs to invest in foreign real estate. Moreover, it remains possible for FBIs to invest in Dutch real estate through Dutch subsidiaries that fall within the scope of Dutch CIT.

VBI
As of January 1, 2025, the VBI regime is limited to entities qualifying as investment institutions and funds for collective investment in securities mentioned in the Financial Supervision Act. Entities that do not qualify can no longer apply the VBI regime.

OFGR
As of January 1, 2025, the qualification for OFGRs aligns with the legal definition of investment funds and funds for collective investment in securities. OFGRs that do not fall within this qualification will face a final settlement of corporate tax. There are various facilities than can be applied to mitigate negative tax impact.

Other developments: FASTER, DAC 8, ATAD 3, Pillar 1

In addition to the changes from the Tax Plan 2024, there are several developments in the international domain. The main developments listed:

FASTER: Refund of withholding taxes
The European Council approved directive proposal FASTER, which aims to reduce trade barriers in the form of withholding taxes for European investments. FASTER standardizes the administrative procedures for tax refunds and repayments. Under the FASTER system, member states have two options:

• withholding the correct tax rate on dividend and interest payments; or
• repayment of unjustly withheld tax within fifty days.

Member states can choose which option to apply. FASTER must be implemented in national regulation no later than 31 December 2028. 

Directive proposal DAC8
DAC 8 is a European directive proposal aimed at service providers on the crypto market. The proposal requires service providers to collect information about clients, and report transactions of clients residing or established in the EU. The directive proposal shows significant similarities with the earlier Crypto Directive MiCa. This improves transparency about crypto transactions in Europe. Furthermore, the proposal extends the automatic exchange of information to cross-border rulings of wealthy individuals.

The intended entry into force of DAC8 in the national law and regulations of member states is January 1, 2026.

ATAD 3: Tackling flow-through companies
ATAD 3 is a European directive proposal aimed at combating tax abuse through flow-through companies. Under the directive proposal, benefits from European legislation and tax treaties are no longer granted to qualifying flow-through companies. A company qualifies as a flow-through company if it:

has received at least 75% passive qualifying income in the two previous tax years (e.g. interest, royalties, dividends);

• conducts cross-border activities;
• outsourced the management of daily activities and decision-making on important functions in the two previous tax years.

Please note: companies that qualify under the abovementioned criteria that have sufficient substance and companies that do not lead to a tax advantage are exempt from being flow-through companies.

This directive proposal is still under consideration. It is unclear whether the directive proposal will be adopted or when the directive proposal will come into effect.

Pillar 1
Progress has been made regarding Pillar 1. This is a proposal within the OECD/G20 to revise international corporate income tax. This proposal introduces new rules for the allocation of taxing rights between countries where multinational companies are active. This also grants taxing rights to market jurisdictions where the company does not have a physical presence, only customers. The OECD has finally announced that more concrete direction will be given to the Pillar 1 proposal at the end of 2023.

Want to know more?

Would you like to know more about the Dutch developments in international taxation? Call Susanne Knol-Bongers, international team lead at +31 (0)88 253 3249.