Tax plan for 2024
Tax law should be constantly adjusted to economic changes. The Dutch Cabinet is not idle and has prepared changes that will provide support mainly to private individuals, not necessarily to entrepreneurs. The most important reforms concern, among others: increasing the child budget, housing allowance or employment tax relief. We will briefly present these changes in this article.
After reading our article you will learn:
1. What reforms will the Cabinet introduce for entrepreneurs?
2. You will learn about changes for private individuals.
3. You will learn about the modification of car taxes.
1. What reforms will the Cabinet introduce for entrepreneurs?
Let's start with MKB - relief for small and medium-sized companies (ZZP, VOF), which means that part of the profits is not taxed. Support in this form will be reduced from 14% to 12.7%. The greatest negative effects of this change will be borne by entrepreneurs achieving the highest profits, which does not change the fact that people with lower income will also feel this change.
Another reform concerns relief for the self-employed, which will be reduced from €5,030 to €3,750. Due to this change, entrepreneurs will have to pay higher tax. The amounts mentioned are also known as the tax-free amount. I will only add that in 2020 this relief amounted to €7,030.
Income tax for people working in the Netherlands has two thresholds. In 2024, the second tax bracket will be lower indexed by 3.55% instead of 9.9%. As a result, people with high incomes will have fewer benefits. The first tax bracket in 2024 will be 36.97% of the minimum amount of €38,098. The second tax bracket remains at 49.50% for income exceeding €75,624.
The good news is the increase in travel cost reimbursement from €0.21 to €0.23 per kilometer.
In the case of corporate income tax (VPB), nothing has changed compared to 2023. We will pay 19.0% on income not exceeding €200,000, and above this amount it is 25.8%. Other changes regarding companies, such as the amount of tax on dividends paid, will be described in a separate article.
2. Changes for private individuals.
For people working and receiving the minimum wage, tax relief will be increased by €115. This means that people earning up to €38.098 a year will benefit financially.
From 2024, income tax will also change for individuals earning up to €75,624 per year (second threshold). It will be increased by 0.04% compared to the current year and will amount to 36.97%.
People earning the most (over €75,624 per year) will pay 49.5% of income tax.
The insurance subsidy (so-called Zorgtoeslag) will be reduced and will amount to a maximum of €127 per month for 1 person, fiscal partners can receive up to €243. Rent subsidies (so-called Huurtoelsag) will be increased by €416 per year.
The child allowance (Kindgebonden budget) will increase by €750. This amount applies to the first child. For each next children additional it will increase by €883. However, for children between 12 and 17 years of age, the allowance will increase by a maximum of €400 per year.
The amount of each of the above-mentioned subsidies depends on the income we will achieve in 2024, nothing has changed in this respect.
As in the past year, the minimum wage will increase. From January 1, 2024, people over 21 years of age will earn a minimum gross salary of €13.27 / hour.
3. Modification of car taxes.
From 2025, buying a new car will be more expensive. BPM is a tax you pay when you buy a new car or motorcycle. The constant base BPM will increase by €200. This will also apply to electric cars, which have so far been exempt from this tax.
Entrepreneurs using their delivery vehicle for business purposes do not currently pay BPM. This relief will end in 2025. However, this will not affect electric cars, they will remain exempt from BPM. Only combustion delivery vehicles will be more expensive.
The MRB exemption for classic cars is also coming to an end. Currently, no motor vehicle tax is payable for vintage cars that are 40 years old or more. From 2028, this rule will only apply to vehicles manufactured before January 1, 1988. Vehicles manufactured after this date are no longer eligible for this exemption.
Another change applies especially to us Poles. The period for additional assessment of foreign license plates will be shortened. Motor vehicle tax (MRB) is automatically assigned to vehicles with Dutch license plates. Owners of vehicles with foreign license plates must register with the MRB themselves. If they doesn't do this within 12 months from January 1, 2024, additional costs may be charged. This includes not only people who try to defraud the office but also people who do not know the applicable regulations.
A driver who has not yet encountered an envelope addressed by CJIB will be able to sleep soundly. For regular recipients of the above-mentioned correspondence, small changes are also planned. Penalties for traffic offenses will increase by 10%.
Summary
The year 2024 will bring a lot of changes - both for individuals and small and large enterprises. The planned tax changes are intended to help the inhabitants of the Netherlands survive inflation and the crisis. Despite the good intentions of the Dutch Cabinet, you should be prepared for an increase in some fees, especially for entrepreneurs.