1. Dutch corporate income tax

Rates
In 2025, the general corporate income tax (“CIT”) rate still is 25.8%, with a reduced rate of 19% applying to taxable profits up to and including EUR 200,000.

Broadening the percentage of the earnings stripping rule 
As of 2025, the earnings stripping rule will be expanded. In short, the earnings stripping rule limits the interest a company may deduct when determining its taxable profit, when the balance of interest exceeds the EUR 1 million threshold or 20% of fiscal EBITDA. However, as of January 1, 2025, this percentage of 20% will be increased to 24.5%. This means that a higher amount of interest is deductible.

Tax Qualification Policy for Legal Forms Act
Starting January 1, 2025, the Tax Qualification Policy for Legal Forms Adjustment Act (in Dutch: “Wet fiscaal kwalificatiebeleid rechtsvormen”) will come into effect. This legislation aims to decrease the amount of hybrid mismatches as a result of international qualification discrepancies. These discrepancies could – for instance – lead to double taxation or double deduction. In essence, this legislation will terminate the Dutch non-transparent limited partnership (in Dutch: “open commanditaire vennootschap”) and install new methods for qualifying foreign legal entities. This termination means that the Dutch non-transparent limited partnership will become transparent for Dutch tax purposes and therefore will no longer be subject to Dutch CIT. This measure also applies to similar foreign legal entities.

Any structure containing one or more of the following legal entities may be affected by the new legislation:

• A non-transparent Dutch limited partnership
• A foreign legal entity, similar to a non-transparent Dutch limited partnership
• A foreign legal entity, not similar to an existing Dutch legal entity
  
  

Adjustment to the VBI regime
Starting 2025, the regime for tax exempt investment funds (in Dutch: “Vrijgestelde Beleggingsinstelling” and hereafter: “VBI”) will be limited to investment institutions under the financial supervision act (in Dutch: “Wet Financieel Toezicht”). Due to this adjustment, the VBI regime will in principle no longer be applicable to entities that invest in private assets of participants (mainly family funds).

Adjustment to the FBI regime
As of January 1, 2025, a fiscal investment institution (in Dutch: “Fiscale Beleggingsinstelling” and hereafter: “FBI”) – which is liable to Dutch CIT but where the profits are taxed at a rate of 0% – is no longer allowed to directly invest in Dutch real estate. This adjustment eliminates two loopholes of the FBI regime. Nevertheless, a FBI can still (continue to) invest in Dutch real estate through a regularly taxed subsidiary or continue to invest (in)directly in foreign real estate.

Adjusted definition FGR
As of January 1, 2025, the definition of mutual funds (in Dutch: “Fonds voor Gemene Rekening” and hereafter: “FGR”) will change. The so-called consent requirement (in Dutch: “toestemmingsvereiste”) will be dropped. Instead, the definition will be aligned with the definition of investment funds and funds for collective investments in securities as described in the Dutch Financial Supervision Act. This adjustment aligns the use of an FGR with its original objective.

Amendment debt waiver income exemption
When a company is facing financial troubles, creditors may decide to forgive its debts. However, a forgiveness of debt leads to a corporate income tax gain for the debtor. The debt waiver exemption (in Dutch: “kwijtscheldingswinstvrijstelling”) prevents the debtor from having to pay CIT. In some cases, if the forgiveness of debt was greater than EUR 1 million, taxes could still be due because of the concurrence with loss relief rules. However, the forgiveness of debt exemption is now amended so that this no longer occurs. Consequently, the adjustment to the forgiveness of debt exemption ensures that taxpayers are no longer restricted in their loss relief.

Pillar Two: Minimum Taxation Act 2024
Since January 1, 2024 the Netherlands has a minimum tax, which has to be paid by (multinational) groups with a (global) turnover of at least EUR 750 million if their effective tax rate amounts to less than 15%. The Minimum Taxation Act 2024 (in Dutch: “Wet minimumbelasting 2024”) is the implementation of the EU Pillar Two Directive. The way in which the minimum tax is levied depends on the applicable measure. Currently, Dutch law knows three mechanisms:

• The Qualified Domestic Minimum Top-up Tax (QDMTT)
• The Income Inclusion Rule (IIR)
• The Undertaxed Profits Rule (UTPR)

The QDMTT and the IIR both took effect on January 1, 2024. As of January 1, 2025, the UTPR is also applicable. In doing so, safe harbour rules have come into force to limit the administrative burden for enterprises. With this implementation, the Minimum taxation Act has come into force completely.

2. Dutch personal income tax

General:
The Dutch personal income tax (“PIT”) divides income into three sources (“boxes”):

• Income from employment and residential home (box 1)
• Income from a substantial interest of 5% or more (box 2)
• Income from savings and investments (box 3)

Each box has its own rates and its own rules for determining the tax base. Currently, the box 1 income is taxed at the rates as stated below (2025):

Box 2 income is currently taxed at a progressive rate divided into two brackets (2025):

In principle, box 3 income is set at a mixed notional yield in the following range:

• 1.44% for savings
• 5.88% for investments and other assets; decreased by
• 2.62% for debts

In 2025, the tax-free equity threshold in box 3 amounts to EUR 57,684 (EUR 115,368 for fiscal partners). The box 3 income is taxed at a flat rate of 36% (2025).

Box 1: deduction of the MKB profit exemption
The small and medium-sized profit exemption (in Dutch: “MKB-winstvrijstelling”) will be reduced from 13,31% (2024) to 12.7% (2025).

Box 2 : termination of the corporate donation exemption
As of 2025, the extension of the exemption in the dividend withholding tax (hereafter: “DWHT”) and PIT (box 2) for donations from companies to charities will be terminated. Donations that meet the criteria for the gift deduction for CIT purposes (up to 50% of profits, with a maximum of EUR 100,000) will remain exempt from DWHT and PIT (box 2).

Box 3 : income from savings and investments

In June, 2024, the Dutch Supreme Court ruled that the box 3 legislation is still in violation of the principle of non-discrimination and the fundamental right to property if the fixed return percentage exceeds the actual return on all assets. Retroactively, taxpayers will be allowed to prove that their actual return was lower than the fixed rate return. Taxes will be reduced to the actual return on all assets if the taxpayer successfully proves that the fixed rate return exceeds the actual return.

In this respect, the Dutch Supreme Court has ruled that unrealised gains should be taken into account when calculating the actual return. Additionally, certain costs may not be taken into account when calculating the actual return.

Box 3: climate friendly investments
As of January 1, 2025, the tax benefits regarding climate friendly investments (in Dutch: “groene beleggingen”) will be scaled back. The exemption on climate friendly investments in box 3 will be reduced from EUR 71,259 (EUR 142,502 for fiscal partners) to EUR 26,312 (EUR 56,624 for fiscal partners) in 2025. The climate friendly investment tax credit (in Dutch: “heffingskorting groene beleggingen”) will be reduced by 0.6 percent-point to 0.1% of the exempt amount.

3. Dutch wage tax Act

Restriction of the 30% facility

The 30% facility is a fixed tax-free allowance for temporary extra-territorial costs. Under the 30% facility, a foreign employee working in the Netherlands (inward expatriate) may be granted a tax-free reimbursement amounting to 30% of the income from active employment. The maximum duration of the 30% facility is five years. The 30% facility is also available in respect of employees seconded to any country in Asia, Africa, Latin America and certain Eastern European countries (outward expatriates).

As of January 1, 2024, the compensation was capped: the 30% facility has since been limited to the standard of the Standards for Remuneration Act (in Dutch: “Wet Normering Topinkomens” and hereafter: “WNT”). In 2025 the norm will be set at EUR 246,000. Furthermore, the step-by-step reduction of the maximum percentage that started in 2024 will be reversed. A transitional arrangement applies for employees who were using the 30% facility no later than the last wage period of 2022. For such employees, the 30% facility will not be limited to the WNT standard until January 1, 2026.

As of January 1, 2027, the maximum percentage will be reduced from 30% to 27% for both inward and outward expatriates. A transitional arrangement applies for employees who were using the 30% scheme no later than the last wage period of 2023. These employees will continue to be subject to the 30% rule throughout the entire term.

In order to apply the 30% facility, a minimum salary requirement applies, which is indexed annually. In 2025, this minimum salary amounts to EUR 35,468 for expatriates younger than 30 holding a Master’s degree and EUR 46,660 for other expatriates. As of January 1, 2027, this minimum salary will increase (EUR 38,388 resp. EUR 50,536) for all employees using the 30% facility from 2025 onwards.

As of January 1, 2025, the partial foreign tax liability scheme has been terminated. Consequently, employees covered by the 30% ruling will all be completely liable to Dutch PIT. However, employees that were already covered by the 30% ruling before the end of 2023 will still be able to opt for the partial foreign tax liability until January 1, 2027.

4. Withholding taxes

Dividend withholding tax : maintaining the share buyback facility for stock market funds

The DWHT share buyback facility (in Dutch: “inkoopfaciliteit”) will be retained beyond January 1, 2025. This scheme would have been terminated by January 1, 2025 due to an amendment made by the previous House of Representatives (in Dutch: “Tweede Kamer”).

Under Dutch law, companies must pay DWHT when they buy back shares. With the share buyback facility, share repurchases by stock market funds are in principle exempt from DWHT.

Conditional withholding tax : adjustment of the group definition

In 2025, a new group definition – the ‘qualifying unity’ (in Dutch: “kwalificerende eenheid”) – will be introduced. This definition will be introduced because there were signals from practitioners that the concept of a ‘cooperating group’ (in Dutch: “samenwerkende groep”) causes withholding tax to be due in situations where it was not intended. This new definition focuses on situations where entities act jointly with the main objective (or one of the main objectives) being to avoid the levying of withholding taxes at the level of one of the group entities.

5. Dutch real estate transfer Act / VAT

Adjustment of the parcel exchange exemption
As of January 1, 2025, the parcel exchange exemption (in Dutch: “kavelruilvrijstelling”) in real estate transfer tax (in Dutch: “overdrachtsbelasting”) will be adjusted. Up until December 31, 2024, it was possible for situations to occur for which the parcel exchange exemption was not intended. For instance, there were ample opportunities for obtaining houses and other real estate without paying the transfer tax. Therefore, the conditions for applying the exemption on a parcel exchange in a rural area are adjusted on four points:

• The parcel exchange exemption no longer applies to the acquisition of residential real estate, except for agricultural business residential real estate
• Only structures used agriculturally on a commercial basis can be covered by the parcel exchange exemption (the “agricultural requirement”)
• A continuity requirement applies, meaning that encroachments and agricultural business residential real estate covered by the parcel exchange exemption must either still be used agriculturally on a commercial basis after ten years, or be an agricultural dwelling
• If the continuity requirement is not met, real estate transfer tax will be due, unless the continuity requirement is not met because the real estate has been withdrawn from agricultural use because of government intervention for the development and conservation of nature and landscape.

Termination of the reduced VAT rate on agricultural input goods and services

The agricultural scheme was terminated as of January 1, 2018, but the reduced VAT rate on the supply of certain agricultural goods remained in place. Due to the termination of the agricultural scheme, agricultural entrepreneurs are subject to VAT, thus removing the usefulness of a reduced VAT rate. Therefore, the reduced VAT rate on agricultural input goods and services will be terminated as of January 1, 2025. The regular VAT rate of 21% will apply (as opposed to the reduced VAT rate of 9%).

Examples of agricultural input goods are supplies of certain products, such as legumes and grains not qualifying as food, seed potatoes, livestock, beetroots, agricultural and horticultural seeds, roundwood, straw and cattle feed.

Adjustment of the KOR

As of January 1, 2025, the small business scheme for Dutch VAT purposes (in Dutch: “Kleine-ondernemersregeling” and hereafter “KOR”) can also be applied in other EU jurisdictions. Among others, the conditions include that the annual turnover within the EU may not exceed EUR 100,000. Additionally, the annual turnover may not exceed the turnover limit as set by any relevant Member State. In the Netherlands, the profit threshold for applying the KOR is set at EUR 20,000 (2025).

Furthermore, the deadlines for the periods during which the KOR must be applied and the deadlines within which the KOR may not be applied after its termination are shortened. From January 1, 2025, onwards these time limits will apply to any entrepreneur applying the KOR (i.e., even if the KOR was already applied before January 1, 2025).

Adjustment of the margin scheme

From January 1, 2025, the so-called additional margin scheme (in Dutch: “aanvullende margeregeling”) in the Dutch VAT Act will change. When a trader (reseller) has purchased antiques, art or collectibles at a reduced VAT rate, they can no longer apply the margin scheme when selling these goods. The profit margin is the difference between the renumeration and what has been paid by the reseller with respect to the supply of such goods.

VAT position of holding companies

The Dutch State Secretary of Finance has announced that the holding Decree (in Dutch: “Holdingresolutie”) and the Decree regarding the disposal of shares (in Dutch: “Besluit verkoop aandelen”) will be terminated as of July 1, 2025. This may have significant consequences for the VAT position of holding companies, as the two decrees contain key policy regarding the deduction of costs related to the purchase, holding and sale of shares.

6. Other measures

Business succession scheme
The business succession scheme (in Dutch: “Bedrijfsopvolgingsregeling” and hereafter: “BOR”) is an exemption from gift and inheritance taxes when gifting or inheriting company assets. The extent of the exemption depends on the value of the business (going concern value). In 2024, the exemption amounted to 100% for a going concern value of up to EUR 1,325,253. For any value exceeding this amount, an exemption of 83% was applicable. As of January 1, 2025, the exemption amounts to 100% for a going concern value of up to EUR 1,500,000 and any exceeding amount is 75% exempt.

Substantial interest pass-through scheme

When gifting or inheriting a substantial interest (> 5%), the substantial interest pass-through scheme (in Dutch: “Doorschuifregeling aanmerkelijk belang” and hereafter: “DSR ab”) may apply. This scheme transfers the tax claim on the increase in value of the gifted or inherited shares to the recipient of the substantial interest.

Such gifts are subject to the condition that the recipient must have been employed for at least 36 months prior to the gift. As of January 1, 2025, gifts are no longer subject to the employment requirement. Instead, a minimum age will be introduced, meaning that the recipient must be at least 21 years of age at the time of the gift. This also applies to the BOR on gifts.

Business vs. private assets (elective assets)

In 2024, entrepreneurs could opt to qualify the entire value of business assets which were used for business purposes as well as private purposes (e.g., a passenger car) for the BOR and the DSR ab. As of January 1, 2025, entrepreneurs will no longer have this option for business assets with a value exceeding EUR 100,000. When applying the BOR and the DSR ab on assets with a value exceeding EUR 100,000, entrepreneurs must now check to what extent those assets are used for business purposes. As a result, only the components used for business purposes is eligible for the aforementioned schemes.

Efficiency margin

In principle, investment assets are not eligible for the application of the BOR or the DSR ab. However, in 2024, investment assets were allowed to qualify as business assets for up to 5% of business assets. This is called the efficiency margin (in Dutch: “doelmatigheidsmarge”).

As of January 1, 2025, the efficiency margin will be terminated for the BOR. The efficiency margin will also be terminated for the DSR ab by Royal Decree on a date yet to be determined.