Tax news

Tax changes 2004

Miljoenennota 2004

On Tuesday 16 September the cabinet has presented the so called 'Miljoenennota 2004'. A lot of rules are being adjusted or cancelled. Below you will find most of the changes which should take place as of 1 January 2004. Be aware that these are all proposals but they are most likely to be accepted by the parlement.

Personal tax credits and tax rates

The combined rate for the first bracket will be changed to 33,40% (was 33,15%) and for the second bracket 40,35% (was 38,65%). 

The personal tax credit will be raised to € 1.829, the labour deduction will be € 1.214, an extra combination credit of € 290 will be introduced and the child credit will be raised with € 68.

A special deduction for employees who will go on parentship leave using the new 'levensloopregeling' will be introduced. With the 'levensloopregeling' an employee can save a maximum of 12% of the salary which can be used to pay leave to support the family or for other personal matters.

Company car and travel allowance

Rules for the company car will be simplified. All the kilometers from home to work and back will be treated as business kilometers again. The percentage will be fixed at 20% instead of the different percentages we currently have (10%, 15%, 20% and 25%). Besides a car registration also a statement from the employer may be sufficient to prove how many kilometers were driven with the car for private purposes. Since the graduations won't exist anymore this is only beneficial if the private kilometers are below 500.

In exchange the travel allowance for use of the own car for business purposes will be reduced from € 0,28 per kilometer to € 0,17 per kilometer. The allowance for kilometers from home to work and back can be given independent of the distance. Currently an allowance can only be paid if the distance is more than 10 kilometers. The allowance will now cover all the business trips. If an employee uses public transport the employer may decide to reimburse the actual costs or a maximum of € 0,17 per kilometer.

Prepension and VUT agreements

Pre pension and other ways to retire earlier won't be facilitated with tax benefits anymore. This means that the right for future payments will be taxed the moment the right is granted to the employee. Result on the other side is that payments themself will be tax free. Also the possibilities to receive a redundancy package tax free will be terminated. Changes are aimed to be made as of 1 January 2005.

At this moment a big discussion in the parlement is going on about this subject. They want to keep the pre pension but it's unclear how it must be paid.

Property, the own home

When somebody sells his main residence he can only get a tax deduction for the interest which has to be paid on a mortgage which covers the selling price of the old property plus the higher value of the new property. In other words, the proceeds must be invested in the new property completely. If part of the proceeds are used to buy something else or to invest in stocks the interest on the part of the mortgage which sees on these amounts can't be deducted.


Current mortgage € 200.000
Selling price current property € 250.000

Buying price new property € 300.000

Maximum new mortgage will then be € 250.000. The realized equity of € 50.000 in the current property is expected to be reinvested in the new property.

On the other hand people who don't have a mortgage anymore or have a very low mortgage will be favoured. The fixed income (0,8% of the WOZ value of the property) will never be more then the deductible interest and costs of the mortgage.

Extra allowance for people who are long term disabled

If these persons have no income or a negative income causing they can't deduct their costs, they may receive a special allowance.

Modernization of the social security system

  • The disability insurance for employees (WAO) will be reformed per 1 January 2006
  • In 2005 the disability insurance for self employed (WAZ) will be cancelled
  • Employers will have to continue to pay salary in case of sickness for 2 years instead of 1 year
  • The continuation benefit ('vervolguitkering') in the unemployed insurance will be cancelled which means that an unemployed person will sooner go to wellfare after the first period the unemployment benefit has been paid


Some other measures

  • The special education deduction and pay over reduction for employers will be cancelled
  • The pay over reduction for research & development and child care will be raised
  • Taxes on tobacco will be raised with € 0,46
  • The so called 'Zalm-snip' will be cancelled. This is the € 45,38 reduction you should receive every year from your local government
  • The user part of the local property tax will be cancelled
  • Green energy won't be subsidized anymore
  • If you have filed a request for a provisional refund the tax office will sent you automatically the same refund the next year unless you notify them about changes occured in your personal situation.


and much more.....



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