The Last Prinsjesdag of Rutte IV: What to Expect Now and What Awaits the Next Cabinet 

Prinsjesdag 2023 marked the final presentation of the Miljoenennota (Budget Memorandum) by Finance Minister Sigrid Kaag to the Dutch Parliament. With the cabinet being demissionary, the budget is ‘policy-poor,’ meaning it avoids controversial political decisions except for urgent measures like poverty reduction. The Cabinet is allocating more than two billion euros for this, aiming to increase the average purchasing power by 1.8% next year. This blog outlines which initiatives are postponed and which are prioritized.

Increased Travel Allowance

The tax-free travel allowance for businesses will increase from 21 to 22 euro cents per kilometer, easing mobility costs for employers and independent contractors.

Additional Employment tax credit

The employment tax credit will increase by approximately 115 euros for incomes between 23,000 and 37,000 euros, benefiting employees and “income tax entrepreneurs” such as sole proprietors and general partnerships.

SME Profit Exemption Adjustment

The SME profit exemption is a tax advantage for small business owners.
The current tax exemption for the first 14% of profits for small business owners will be reduced to 12.7%.

Reduction of the discretionary scope in Work-Related Costs Scheme

The discretionary scope within the work-related costs scheme will decrease from 12,000 euros in 2023 to 7,680 euros in 2024.

End of the Jubelton

The Jubelton, allowing parents to donate up to 100,000 euros tax-free to their children for home purchases, will be abolished next year.

Termination of the payment discount for Income Tax

The payment discount for paying income tax in a lump sum will be abolished starting January 1, 2024.

Changes to the Box 2 Rates

For significant shareholders, the tax rate for substantial interest in box 2 will consist of two brackets: 24.5% up to 67,000 euros and 31% for the amount above that.

Changes to Box 3 delayed until 2027

The new Box 3 system, based on actual returns, is postponed to 2027. The interim regulation continues until 2026, but the box 3 tax rate will increase from 32% to 34% in 2024.

Income threshold for second bracket in Box 1 unchanged

The income threshold for the second tax bracket in box 1 remains unchanged at 73,031 euros.

Accelerated reduction of the Self-Employed deduction

The self-employed deduction will be reduced faster than planned, reaching 900 euros by 2027. The deduction currently stands at 5.030 euros, but will be reduced to 3.750 by 2024.

One more year of the BPM exemption for commercial vehicles

BPM (tax on passenger cars and motorcycles) exemption for commercial vehicles will be abolished in 2025, with 2024 being the last year to purchase without CO2 conditions.

Reduced Energy Investment Deduction for Entrepreneurs

The energy investment deduction will decrease from 45.5% in 2023 to 40% in 2024.

End of STAP Budget

The STAP budget for personal development will be discontinued starting 2024.
The last application date is November 15, 2023.

Increased Excise Duties on Tobacco and Alcohol

The government will raise excise duties on tobacco and alcohol to discourage consumption.
Hopefully the next cabinet will take measures to make living “healthy” more affordable.

Possible Reversal of Planned Fuel Excise Increase

The majority of the Parliament did not agree with the planned excise increase on fuel.
This will be a topic for the next cabinet.

Implications of Prinsjesdag 2023 for your business

Prinsjesdag brings financial changes affecting entrepreneurs. It’s crucial to understand what these changes entail, and IFS Finance’s tax consultants are ready to assist businesses in navigating these updates.