As of 1 January 2023, a set of tax changes will be implemented that may affect one’s Dutch tax position. In addition, changes starting in 2024 have also been announced. This blog post provides an overview of the most important changes, with special attention to real-estate-related activities.
CORPORATE INCOME TAX
The Dutch corporate income tax (CIT) taxation system applies a double-bracketed system. The first bracket currently taxes corporate profits up to EUR 395,000 at 15%. As of 1 January 2023, this bracket will be reduced to profits up to EUR 200,000. Furthermore, the rate at which the first bracket is applied is being raised to 19%.
The second bracket rate remains 25.8%, but as of 2023 it will be applicable on all profits exceeding EUR 200,000.
|First bracket rate
|Second bracket rate
Changes to the FBI regime
The so-called Dutch Fiscal Investment Institution tax regime (fiscale beleggingsinstelling, or FBI) allows certain Dutch taxpayers to be subject to 0% CIT. Under this facility, investors can jointly invest in a tax-neutral manner (compared to if they had invested directly and individually). The FBI historically has been a popular investment platform for real estate investments.
It has been announced that as of 1 January 2025, the FBI regime will change. As of that date, real estate investments can no longer benefit from the FBI regime. This is expected to have a significant impact on existing real estate FBIs and, even though transitional law has been announced, it likely will cause significant restructuring efforts.
No change to fiscal unity scheme
A Dutch taxable company can form a so-called fiscal unity for CIT purposes with one or more Dutch subsidiaries of which, in brief, it owns at least 95% of shares. As a result, those subsidiaries are no longer independently subject to CIT. Rather, the fiscal unity functions as one taxpayer.
Following recent European case law, the current Dutch fiscal unity scheme had to be adjusted to ensure it would comply with European law. The adjustment resulted in the need for certain legislation to be applied as if there were no fiscal unity (known as the ‘per-element approach’).
The per element approach effectively put the fiscal unity regime under further pressure given practical issues. Amending or replacing the system has been on the table for some time now, but no changes have yet been published under the Proposal.
REAL ESTATE TRANSFER TAX
Real estate transfer tax
The general rate of Dutch real estate transfer tax (generally applicable to transfers of real estate portfolio investments) will be raised from 8% to 10.4% as of 1 January 2023.
If real estate is transferred to individuals who will live in the property on a long-term basis, a 2% rate would apply. And finally, if real estate is transferred to individuals between the ages of 18 and 35, and the transfer value does not exceed EUR 440,000, an exemption would apply.
ENERGY INVESTMENT ALLOWANCE
Energy investment allowance
The budgetary scope for the energy investment allowance (EIA) will be increased by EUR 50 million per year starting 1 January 2023.
Abolition of the landlord levy
The landlord levy is levied on landlords who, on 1 January of the calendar year, have more than 50 rental properties with a rent below the rent allowance limit (“social rental homes”). The landlord levy will be abolished as of 1 January 2023. As of 2023, landlords will no longer have to file a landlord levy return and will no longer have to apply for levy reductions.