Budget Day 2024: measures for business and trade

RVO statement for environmental investments

In order to claim the environmental investment deduction (MIA) or the random tax write-off for environmental investments (Vamil), a statement from the RVO (Rijksdienst voor Ondernemend Nederland) will first be required. The environmental assessment of the investment will thus fall under the responsibility of the RVO instead of the Dutch tax authorities.

Broadening of interest deduction

The generic interest deduction limitation in corporate income tax ('earnings stripping scheme') will be increased from 20% to 25%. Consequently, the deduction of the interest will be denied insofar as the net interest exceeds 25% (previously 20%) of the fiscal EBITDA. However, if the net interest does not exceed the threshold of € 1 million, the interest remains fully deductible (with the exception of real estate companies).

Anti-fragmentation measure for real estate companies added to earnings stripping legislation

An anti-fragmentation measure is being added to the general interest deduction limitation in corporate income tax (the "earnings stripping measure") for taxpayers who rent out real estate to third parties (real estate entities). For these real estate entities, it will no longer be possible to use the € 1 million deduction allowance. They can only deduct interest up to a maximum of 25% of EBITDA. This measure aims to remove the incentive for "splitting structures". A company qualifies as a real estate entity if, for at least half of the year, the taxpayer's corrected assets mainly consist of real estate made available to non-related parties (third parties).

Simplified sister merger facility

The tax facilities for legal mergers will be expanded to include the simplified sister merger. This will make it possible to carry out a simplified legal tax-free merger between sister companies, where an individual directly holds all shares in the capital of the merging companies (the simplified direct sister merger).

Adjustments of liquidation loss relief

The liquidation loss scheme will undergo two amendments. The liquidation loss scheme entails that the negative difference between the sacrificed amount of the participation and the liquidation distribution received from it is, in principle, deductible for corporate income tax purposes. 

The first amendment concerns the calculation of the sacrificed amount of the participation. The sacrificed amount primarily consists of the amount paid upon acquiring a participation. The amendment ensures that the amount sacrificed may be increased if a write-down of receivables has to be reversed, without this amount being added to the revaluation reserve.

The second amendment pertains to the intermediary holding provision. This provision is intended to prevent a non-deductible negative participation result of an intermediary holding company from being converted into a deductible liquidation loss. However, in practice, it was found that this was still possible in certain situations. The amendment ensures that the liquidation loss scheme better aligns with its original purpose and prevents abuse.

Tax facilities for donations abolished

In corporate tax, the deduction for donations to non-profit organisations that qualify as a public benefit institution (ANBI) or social interest-promoting institution (SBBI) will be abolished as of January 1, 2025. Furthermore, donations from directors / major shareholders (dga’s) to their own company will be regarded as hidden dividend on which dividend tax must be withheld and which is subject to income tax in box 2 (whereby the withheld dividend tax is offset).

Adjustment of debt relief exemption

The exemption for debt relief profits in the corporate income tax will be adjusted to align with the loss offset rules amended in 2022 (limiting the offset of tax losses to 50% of profits with a minimum of € 1 million).The adjustment to the exemption for debt relief profits means that for situations with losses to be offset exceeding € 1 million, the debt relief profit will be fully exempted to the extent that the debt relief profit exceeds the losses incurred during the year. The current system will continue to apply for situations with offsetable losses of up to and including € 1 million.

Introduction of a general anti-abuse rule (GAAR) in corporate tax

A statutory general anti-abuse rule will be added to the corporate income tax law. The rule codifies the existing fraus legis principle, which prohibits any transaction or structure that is set up with the purpose or one of the purposes to obtain a tax benefit and undermines the purpose and spirit of the law.

Dividend tax repurchase facility for own shares

Previously, it was determined that the withholding exemption in the dividend tax for the repurchase of listed shares would be abolished as of 2025. This abolition will be reversed, allowing the withholding exemption in the dividend tax to remain in effect after 2024.

Mandatory application of dividend withholding tax exemption

The application of the withholding exemption for dividends is optional in certain situations (such as in participation situations and within a fiscal unity). This will be converted into a mandatory application, allowing a beneficiary/shareholder who has been subject to dividend tax to object to the withholding of dividend tax (if necessary).

Increase in VAT rate on short-stay accommodations

As of 2026, the reduced VAT rate for the provision of short-term accommodation by hotels, inns and similar establishments will be abolished, increasing the tax rate from 9% to 21%. For camping sites, the reduced VAT rate of 9% will continue to apply.

Increase in VAT rate on cultural goods and services

As of 2026, the reduced VAT rate on cultural goods and services will be largely abolished, increasing the tax rate from 9% to 21%. This applies to art, books, the provision of sporting and bathing activities, museums, theatre, sports competitions and performing artists, among others. For day recreation, such as amusement parks, playgrounds, circuses, zoos, and cinemas, the reduced VAT rate of 9% will continue to apply.

Extension of VAT revision rules in real estate investment services

From 2026, the VAT revision rules will be extended to investment services to immovable property for which the remuneration exceeds a threshold amount of € 30.000 (e.g. remodeling services). These are investment services that ‘serve’ the immovable property ‘for several years’, such as painting of window frames and doors, soil or asbestos remediation, installation of kitchens and bathroom (sealants), isolation and wall or roof renovation. If the use of the immovable property changes within five years, the VAT deduction on the immovable investment services must be corrected. This makes the initial short-term rental of an immovable property (VAT taxed) followed by long-term rental (VAT exempt) less attractive.

Abolition of special arrangements for excise duties

Certain provisions for the levy of excise duties are being abolished. This concerns the additional levy of excise duty for stocks with excise duty in the event of an increase in fuel excise duty and the refund of excise duty for stocks with excise duty in the event of a reduction in fuel excise duty.

Limitation of RETT land consolidation exemption

The exemption for land consolidations (‘kavelruilvrijstelling’) in the real estate transfer tax will be limited as of 1 January 2025. The exemption will no longer apply to buildings and structures (houses), unless they are used for commercial agricultural purposes. For such agricultural business houses, the land consolidation exemption will continue to apply if the business operation is continued for at least 10 years.

Lowering of RETT rate for residential properties

The real estate transfer tax (RETT) rate for residential properties that do not serve as main residence will be reduced from 10.4% to 8% as of 1 January 2026. The rate for the acquisition of residential properties used as the main residence remains unchanged at 2%.

Extension of starter's exemption and reduced RETT rate

The application of the starter's exemption and the reduced rate for residential property serving as main residence (2%) in real estate transfer tax will be extended to economic property             acquisitions. This could include, for example, the renewal of a leasehold right via an obligatory agreement in anticipation of the legal establishment of the leasehold right. It is not required that the legal ownership is also eventually acquired. 

Exception key agreement as acquisition of beneficial ownership for RETT purposes

A key agreement is an agreement whereby the buyer receives the key in advance of the legal acquisition of the property. Entering into a key agreement may currently constitute an acquisition of beneficial ownership for real estate transfer tax purposes. This is a taxable event for transfer tax purposes. This taxable event when entering into such key agreements will be abolished. Transfer tax will then only be payable at the time of legal title acquisition. 

Introduction of new group concept in conditional withholding tax

In the conditional withholding tax on dividend, interest and royalty payments to low tax jurisdictions, the term ‘cooperating group’ will be replaced by a new group concept (qualifying unit).

Tax qualification policy for foreign legal forms

In the last year adopted Tax Qualification Policy Act, some technical omissions came to light. These will be corrected.

Adjustment of the subject-to-tax test in corporate tax

Certain corporate income tax facilities are only granted if the other group company is sufficiently subject to taxation by Dutch standards. Further it has been confirmed that the OECD Pillar 2 minimum tax for multinationals qualifies as a tax levied on profits for the application of the subject-to-tax test.

Changes to the Minimum Tax Act

Following the publication of new administrative guidelines by the OECD, these guidelines will be included in the Minimum Tax Act 2024 and this law is being improved or clarified in some respects.

Application object exemption for the disregarded permanent establishment

In order to avoid double taxation of the disregarded permanent establishment, it has been proposed that the object exemption should apply if the disregarded permanent establishment is subject a profit tax in the State in which the permanent establishment is deemed to be resident for the purposes of the object exemption.