Tax Plan 2016

Budget Day

Budget Day - Tax Plan 2016


This article gives you an overview of the most important proposals of the Tax Plan 2016 and additional bills.
The article is divided into the following subjects:


Unless stated otherwise, the proposed measures will be effective as of 1 January 2016.



6% VAT rate to apply to a lower number of medicines
The government wishes to set a new condition for medicines which fall under the low 6% VAT rate. The low rate will apply to a medicine if marketing authorization has been granted within the scope of the Medicines Act. If the Medicines Act states that marketing authorization is not compulsory for a specific category of medicines, then the entrepreneur is also allowed to apply the low rate to the delivery of these medicines.

Please note!
The term ‘medicines’ has not been clearly defined yet. Some products are on the boundaries of qualifying as a medicine, such as muscle balm or scar treatment gel. The court does not always agree with the tax inspector in this discussion.

Research exempt from corporation tax liability
In relation to the extension of the corporation tax liability (“vpb liability”) of public-sector companies, the legislator states that an objective exemption applies to specific benefits. These are activities which an organization carries out, such as an academic hospital, which partly serves scientific medical education as well as scientific research. In addition, education and research that are financed mainly in specific ways, are granted objective exemption. This concerns financing by public means, statutory tuition fees, institution tuition fees, school fees, foreign contributions comparable with these tuition or school fees or with contributions of non-profit institutions for general public advancement for which no contractual consideration is asked.


Documentation obligation for multinationals
Multinationals will face new standardized obligations to document with regard to the intercompany transfer prices. This will include country-by-country reports, master files and local files. The obligation to report in this way will apply to financial years starting on or from 1 January 2016.

Please note!
In principle, existing documentation obligations will continue to apply to companies if their turnover remains under a certain threshold. This amount will vary per documentation obligation. A country-by-country report, for example, is only obligatory if the multinational group obtains a turnover of € 750 million or more.


Step-up in case of cross-border legal merger
As of 1 January 2016, companies involved in a cross-border legal merger or legal split-up, will need to consider a so-called step-up provision. In broad outlines, this provision will entail the following: The shareholders must set the tax value of the capital paid up to the new shares, which they received as a replacement for the shares of the merged or demerged body, to the fair value of the capital which was transferred due to the merger or demerger. In this way, the legislator prevents the Netherlands from establishing a dividend tax claim on existing foreign retained profits. This provision will not be effective insofar the transferred capital consists of shares in a Dutch company.


Remuneration subsidiary taxed at parent
The holding exemption or holding compensation will no longer apply to remunerations and payments, as well as replacements of such amounts, which a parent company receives from a holding, if the holding can deduct these remunerations and payments from its profits tax. If such remunerations and payments have been included in the price for the acquired holding, then they will also be taxed at the parent company if the subsidiary could deduct these.

Please note!
The remunerations and payments to which the holding exemption and holding compensation do not apply on the basis of this new scheme, likewise do not fall under the rules of subdividing in case of a transition.


Restriction of holding compensation
Remunerations and payments are exempt from holding compensation from a low-taxed investment participation insofar these are deductible for that participation. The actual due tax for the participation is of no interest for the holding compensation.


More frequent substance assessments for foreign substantial interest
If a foreign entity holds a substantial interest (at least 5%) in a Dutch entity, then the dividends and capital gains on a substantial interest from that Dutch entity are conditionally taxed. This taxability occurs if the foreign entity holds the substantial interest with the objective, or one of the key objectives, of avoiding Dutch income tax or dividend tax. Currently, this scheme does not apply if the interest is part of the business assets. However, as from 2016, all cases must be assessed whether the interest is held with the objective, or one of the key objectives, of avoiding Dutch income tax or dividend tax. In addition, an assessment must also be made whether the structure was set up based on valid business reasons which reflect the economic reality. The provision does not apply in case of valid business considerations.

Please note!
The valid business considerations will be determined based on the so-called substance requirements. There is no problem whatsoever if the foreign entity itself or through an intermediate company operates a substantial enterprise and the substantial interest can also functionally be calculated to the business assets.


Cooperation withholds dividend tax
In principle, a cooperation only needs to withhold dividend tax if the cooperation is placed in an interposition in order to avoid the dividend tax levy. Currently, this obligation to withhold is not applicable if the membership rights are part of the business assets, but this distinction will lapse. The obligation to withhold will however not apply if there is a question of a business situation. For example, when the cooperation has an independent and economic bearing.


Implementation standard reporting
The OECD has developed a global standard for the identification of and reporting about foreign account holders’ accounts. This Common Reporting Standard (CRS) serves to address international tax evasion and tax fraud. Based on European legislation and regulations, the Netherlands has to enforce upon its financial institutions the same identification and reporting standard as the standards arising from the CRS. The Dutch government will incorporate the CRS regulations in Dutch law with regard to international assistance in the levying of taxes. These regulations will also apply to the BES islands.


Public enterprises cannot avoid corporation tax via limited partnership
Based on jurisdiction, a limited partner does not operate a company through its limited partnership interest in a limited partnership if that interest cannot be allocated to its company. Therefore the limited partner would not have to pay corporate tax and the limited partnership itself is not subjected to corporate tax either. In order to repair this ‘tax leak’, a benefit from the partnership interest other than stockholdings, will be levied with the legal entity under public law one way or the other.

Please note!
This scheme will also apply to other entities which are only liable for corporation tax insofar they run a company, such as associations and foundations.

Tax-exempt merger public bodies
Thanks to a proposed amendment, municipalities, provinces, water boards and ministries will be able to merge, divide, or rearrange tasks without having to pay corporate tax for this. Initially, the legislator wished to settle this on a case-to-case basis or by Royal Decree. As municipality mergers and rearrangements of tasks at ministries take place regularly, an amendment to the (1969) Corporation Tax Act was more obvious.


21% VAT on growth medium for magic mushrooms
Earlier this year, the Supreme Court ruled that low VAT rate applied to the supply of growth medium for magic mushrooms. By adding a note to the low VAT tax rate goods table, the legislator wishes to ensure that the regular VAT rate applies to seeds, agricultural and horticultural seeds if these can be used to grow plants and fungi which qualify as narcotics and suchlike.




Integration RDA (Research and Development) and S&O (Research and Development work)
By integrating the S&O rebate and the RDA rebate, there will be one tax rule less per 2016 and the S&O rebate will consist of one basis for all research and development costs. There will also be an adjustment of the various allowance percentages, the start-up percentage and the boundary between the first and second bracket. The current maximum will lapse, as a result of which there will no longer be a maximum for the rebate to consider to the due payroll tax and national insurance contributions. In order to economize the integrated regulation, two types of activities will no longer qualify for rebate.


Research and Development rebate




lowest rate bracket



lowest rate bracket start-up



Lowest rate bracket boundary

€ 250,000

€ 350,000

second bracket




€ 14 mil



The amounts which have not yet been submitted under the current RDA scheme (outstanding S&O expenses) can be entered in the S&O application under the new scheme. This has to be done in the same period which is mentioned on the current RDA decision and yearly a proportional part.


Income-dependent build-up of employed person's tax credit in table special rewards
Based on the Tax Plan 2015, the income-dependent phasing-out of the employed person's tax credit has been incorporated in the table special rewards for the year 2015. As of 2016, this will also be the case for the income-dependent build-up of the employed person’s tax credit. For employees with an income up to approximately €20,000, this means that they can use the part of the tax credit for special rewards directly in the payroll tax.


Tightening of standard practice criterion
The standard practice criterion for the work-related expenses scheme will be adjusted to make it easier for the tax authorities to act against tariff arbitration. The allocation by the employer of a remuneration or the provision of a certain scope as final levy component has to be common practice, and not the scope of the remunerations or provisions as such. Therefore it has to be common practice that the employer pays for the levies on the remuneration or provision via the final levy.

Please note!
It is not common practice that an employer allocates the monthly wages, holiday pay or a high bonus of an employee as final levy component.

Conversion of existing premium reduction of specific employees
Based on the bill allowances wage domain, a new system will be created which will allow employers’ allowances in the form of wage costs advantages for the employment of older people entitled to a benefit and work-disabled persons (LKVs, wage cost advantage). This system should be effective as of 1 January 2018. In addition, this bill settles the implementation of a wage costs advantage for employers who employ employees with a relatively low wage (LIVs, low income advantage) as of 1 January 2017. This concerns substantial jobs of at least 1248 labour hours on an annual basis.


Current and new allowances

Target group

Current premium rebate

New  maximum allowance

100 – 110% WML (LIV)


€ 2,000

110 – 120% WML (LIV)


€ 1,000

Seniors 56+

€ 7,000

€ 6,000

Work-disabled persons

€ 7,000

€ 6,000

Job agreement


€ 2,000


In the transition year (2017), concurrence between the current premium allowances and the LIV will be possible. In 2017, the employer can receive both allowances for an employee who qualifies for a premium discount and the LIV.




End of option to pay motor vehicle tax in one payment
As of 1 July 2016, it will no longer be possible to pay the motor vehicle tax for a whole year in one payment. This option of annual payment is an exception to the standard process. As of 1 July 2016, it will be possible to pay in advance per time period of three months. It is also possible and will remain possible to pay the motor vehicle tax by a monthly direct debit.

Please note!
This change does not have any consequences for annual payments made up to and including 30 June 2016. Annual payments made up to and including 30 June 2016, will remain valid for the remaining duration of the paid period.


Smaller surcharge for foreigners
Based on the Provinces Act, foreign keepers of a car or another motor vehicle are deemed to live in the province which charges the highest provincial surcharge if they are subject to the motor vehicle tax. This year, the Court declared this provision nonbinding as it is in breach of Community law. This is why the Province Act will be amended in such way that foreign payers of motor vehicle tax are deemed to live in the province which charges the lowest surcharge.




Simplification obligation to provide information home acquisition debt
As of the tax year 2016, taxpayers who haven’t taken out their mortgage from a bank or another allocated person required to keep records, no longer need to complete a separate form. The information will be asked for in the tax return. The tax return procedure will be further simplified by completing the previously submitted data in the tax return of the following year.


Repayment requirement will be mitigated
As from 1 January 2013, tax payers have been obliged to repay on their home acquisition debt on an annuity basis. In certain cases, such as payment arrears or unintended errors, a deviation is allowed. However, if the repayment arrears are not made up for in due time, the home acquisition debt will be transferred to box 3 and will definitely no longer qualify as a home acquisition debt. With retroactive effect until 1 January 2013, this repayment requirement will be mitigated. When the existing or new debt meets the requirements again, it can be regarded as a home acquisition debt. 


Amendment exemption policy owner-occupied dwelling I
For the insurance policies taken out before the 1992 general tax reform (Brede Herwaarderingspolis), mortgage-linked endowment insurance (KEW), tax-efficient savings account for mortgage repayment (SEW) and tax-efficient blocked investment account for mortgage repayment (BEW), an exemption per taxpayer applies. In order to use a double exemption in case of a tax partnership, both partners had to be registered in the policy as a beneficiary. In many cases this was not done. As of 1 January 2016, in order to simplify the utilization of the exemption, it will be possible to file a request to this extent together with the tax return.

An application can also be submitted for cases prior to 1 January 2016. This will be settled per decision.


Amendment exemption policy owner-occupied dwelling II
The so-called offset scheme (relating to mortgage-linked endowment insurance) which is meant to apply a maximum exemption for a Brede Herwaarderingspolis - regardless of the number of payments - has been amended in order to repair a leak by means of which in certain cases of an SEW and a BEW an exemption could be utilized while this was not deducted from the maximum exemption.


Taking into account controversial interests with regard to the value for the purposes of the Valuation of Immovable Property Act ("WOZ value")
The WOZ value is used as a starting point in an increasing number of schemes. As a result, other parties than the party receiving the decision have an interest with regard to the WOZ value. The adjustment of the housing evaluation system (used to determine rents) is an example of this: the maximum rent to be paid is partially determined by the WOZ value of the property. The Valuation of Immovable Property Act will be amended in such way that when a notice of objection is registered against the valuation of the immovable property, interests of both tenants and landlords are taken into account.




New income tax rates
For taxpayers born on or after 1 January 1946, the following rates will most likely apply in box 1 of the income tax:

Income tax rate / national insurance contributions 2016  


Income tax rate / national insurance contributions 2016


Taxable income more than (€)

but not more than (€)

Rate 2016 (%)

lowest bracket income tax rate




second-bracket income tax rate




third-bracket income tax rate




fourth-bracket income tax rate





Protective assessment when emigrating remains payable for an unlimited period of time
Upon emigration, to those who own at least 5% of the shares in a company, the Dutch tax authorities will issue a protective assessment on the value appreciation of the possessions for the period that they lived in the Netherlands. Under the current scheme, the emigrant only needs to pay the tax assessment upon sale of the shares or distribution of at least 90% of all retained earnings of the company. Contrary to the current situation, the protective assessment will no longer be waived after a residence period of ten years abroad, but will be outstanding indefinitely. In addition, tax has to be paid proportionally after every distribution of earnings. The proposed measures will apply retrospectively from the moment of publication of the Tax Plan on Budget Day 2015.

Please note!
The above-mentioned measures also apply in other cases in which a protective assessment is issued on income from substantial interest, such as a gift or inheritance of a substantial shareholding to a natural person who does not live in the Netherlands.


Stepchild younger than 27 years does not qualify as partner
Children younger than 27 years cannot qualify as a partner of their father or mother. This exemption does not apply to stepchildren younger than 27 years, because the exemption only applies to consanguinity. In order to treat relations by blood or affinity in the scope of the partner concept in the same way, it will be included in the law that the relation by affinity in the first degree of the taxpayer at request will not qualify as a partner, unless both people have reached the age of 27 years at the beginning of the calendar year.


Another exemption to the partner concept
Furthermore, two people who are accommodated in a shelter home with a child of one of both, will no longer be considered partners for the benefits and for the income tax. In this regard, an exemption is made to the partner concept because this concerns a group of vulnerable people who do not have any control about the specific accommodation in which they are placed.

Leasehold lease construction will become less attractive
In practice, as a financing structure or for the sale of investment property, often the so-called leasehold lease construction is used instead of a ‘sale and lease back’ construction. By using the legal concept of leasehold lease, a levy of transfer tax can be avoided which would be due in case of a sale and lease back construction. From now on, these economically comparable cases will be treated equally with regard to taxation. It will therefore no longer be possible to decrease the basis in case of sale with a concurrent creation of an easement, the right of ground rent or a right of superficies with the capitalized value of the ground rent or retribution.


Commutation of annuity without applying the minimum value rule
When an annuity is commuted during the build-up phase, the minimum value rule applies. The value to be considered for the taxation in box 1 is set at minimally the total of the premiums and other amounts previously paid for the claims. If the value of the annuity is considerably lower than the amount of the premiums which have been deducted from the taxable income, the tax due can exceed the amount paid up by the insurer. For that reason, as of 1 January 2016, the minimum value rule will no longer be used in the income taxation.

Please note!
In cases in which the term for an ex officio reduction has not yet expired, anticipating the amendment of the act, a concession can be granted for commutations which have taken place before 1 January 2016.


Expenses listed properties abroad deductible 
As of 1 January 2016, deduction of expenses for listed properties is allowed for listed properties located on the territory of another EU member state or an EEA member state. For those properties, the requirement applies that the listed property forms an element of the Dutch cultural heritage.


To give up to €100,000 tax-free for the owner-occupied property
The one-off increased exemption for gift tax for gifts from parents to children between 18 and 40 years of age in connection with the owner-occupied property will be extended. As of 1 January 2017, everyone between 18 and 40 years old may receive a one-off gift of a maximum amount of €100,000 exempt from gift tax from a family member or a third party, provided this sum will be used for the owner-occupied property.
Please note!
During 2016, a one-off raised exemption will apply for gifts from parents to children between 18 and 40 years of age. The exemption will indeed increase in 2016 from € 52,752 to € 53,016.


Child maintenance obligation exempt from box 3
With the effectuation of the Act reform child arrangements (WHK), the deduction of expenses for living expenses has lapsed as per 1 January 2015. As a result, a child maintenance obligation is no longer covered by the exemption in box 3 of obligations which can lead to expenses which can be claimed as personal allowance items. This means the right to child maintenance is not taken into consideration but the obligation is indeed taken into consideration, which is why obligations to relations of blood or affinity in the ascending or descending line or in the second collateral line which arise directly from the family right, will be exempt from box 3 as of 2017.

As of 2017, a new levy system in box 3
Under the current scheme, the box 3 income tax is calculated based on a fixed flat-rate return of 4%. As of 2017, the fixed return will be based on the average distribution of the box 3 capital of savings and investments (the capital mix) combined with a return as realized by the market in the past on both components. The assets of each taxpayer will be divided over three brackets. Per bracket, an average capital mix applies which is based on the actual data of all tax returns of the calendar year 2012. The capital mix will be evaluated later on in order to assess whether it is still in line with the reality, or needs to be amended. Subsequently, based on the actual realized market return in the past, an average return will be attributed to the savings component (1.63%) and the investment component (5.5%) in the capital mix. After multiplying by the rate of 30, the tax to be paid in box 3 will be obtained.

Please note!
For taxpayers abroad with a certain box 3 capital in the Netherlands, the same fixed return will be applied as to the domestic taxpayers with an equally large box 3 capital.

Forecast fixed return in 2017
In the table below you will see the fixed return per bracket (marginal and per person) in accordance with the forecast for 2017


Box 3 capital (€)



0 – 100,000



100,000 – 1 mil.



1 mil. or more


1 67% x 1.63% + 33% x 5.5%
² 21% x 1.63% + 79% x 5.5%
³ 0% x 1.63% + 100% x 5.5%


Tax allowance increased to € 25,000
As of 1 January 2017, the tax-free capital amount of € 21,330 (amount in 2015) will be raised to € 25,000 per person. Just as it is now, tax partners may choose how, between themselves, they will divide the joint box 3 capital after reduction of twice the tax allowance of € 25,000 (in 2017). If no choice can be made, half of the basis will automatically be considered for both partners. Differently from the current situation, as of 2017, the division of the basis can affect the tax burden in box 3, precisely when a bracket boundary is exceeded.

Please note!
A 50:50 allocation is always favourable for the tax burden in box 3 if partners exceed a bracket boundary with the joint basis savings and investments.


Overview tax reductions 2016

Tax reductions

2015 (€)

2016 (€)

General tax reductions maximum < state pension age



General tax reductions maximum > state pension age



Phasing-out percentage general tax reduction



General tax reduction minimum < state pension age



General tax reduction minimum > state pension age



Employed person’s tax credit max.



Phase-out percentage employed person’s tax credit



Employed person’s tax credit min.



Work bonus max.



Income dependent combination rebate max.



Young disabled person's tax credit



Elderly person's tax credit

1042 / 152


Single parent tax credit






Simplification of large-scale objections
The large-scale objection procedure will be simplified and rendered more efficient so that people will use it more often. The procedure will be faster because only the Lower House of Parliament will be informed. Publication and the introduction of an objection form or a web-based module will make it easier to submit an objection. The large-scale objection procedure can be passed through even faster by posing a pre-judicial question. Regardless of how the legal question will be answered, the tax inspector will collectively deliver a decision on the basis of the objection. Taxpayers will no longer be able to ask for an individual decision

Please note!
If a taxpayer has also submitted objections to other points, then those will be processed immediately, individually.


Pre-judicial question
A tax-related pre-judicial question will be introduced. At the request of a party or ex officio, the Tax Court can present a legal question to the Supreme Court to obtain an answer by means of a pre-judicial decision. In principle, the legal question must potentially play a role in a large number of comparable cases. The Tax Court may stay the current proceedings to which the same legal question applies, pending the answer.  The Supreme Court will decide whether the question is appropriate for a pre-judicial decision.

Other interested parties or experts may, if so requested, explain their opinion regarding the legal question.


The Dutch Tax authorities increasingly deploy IT in order to simplify the service provision and auditing. Trials regarding levying and paying taxes without a previous assessment or a fine being imposed, and widening the possibilities of setting-off, should assist the simplification process of the service provision.

The taxpayer is not obliged to participate in a trial. He needs to consent to it.


Suspending effect of appeal in case of benefits
Currently, an appeal has no suspending effect with regard to benefits, whereas this is the case for social security and tax law. As a result, the Dutch Tax authority often must pay and subsequently reclaim, with all the associated problems. In order to simplify the execution, the suspending effect of appeal will be effectuated now.


Committal for failure to comply with a judicial order
The recipient is granted the possibility to use committal for failure to comply with a judicial order also in a civil-case claim for damages based on a wrongful act for collection of a tax debt. Currently, this is only possible for the collection of tax debts. Furthermore, the committal can be applied to someone who is an actual policymaker but not a director.


Tightening of possibility of exculpation
Exculpation will remain possible with regard to the equalization reserve and hidden reserves, insofar these reserves concern goods and/or immovable property and property rights which have not been sold within six months after the sale of shares. From now on, in principle, in other cases the liability risk will lie with the seller of the shares. If the seller wishes to exclude the liability risk, he should require securities from the buyer.




Fiction export scheme waste tax
As of 1 July 2015, waste tax has been levied also for obtaining permission to bring the waste outside of the Netherlands and have it burned there. The Human Environment and Transport Inspectorate (ILT) will grant permission to this end per decision. Based on the new fiction, the permission granted by ILT for the fully stated weight will concern waste material which will be burnt abroad. This will only be different if this is specified in the decision. As a result, upon issuance of the decision, it is clear to all parties how much tax is due when the decision expires.


Lowering rate energy tax
The rate in the energy tax for locally generated sustainable electricity will be further reduced. As of 1 January 2016, the rate decrease will be adjusted from 7.5 cent/per Kwh to 9 cent/Kwh.

The rate decrease to 9 cent/kWh applies to cooperations which the inspector designates as of 1 January 2016 and also for cooperations that were designated prior to that date.


Refund scheme for natural gas
For natural gas which has been supplied for use as fuel for vessels on Community waters, including fishing vessels, a refund scheme is proposed. This concerns all waters which are accessible for all vessels suitable for commercial maritime transport, so no inland waterways.

Please note!
Recreational vessels cannot use the refund scheme.


Increase consumer tax alcohol-free beverages
With regard to the consumer tax on alcohol-free beverages, a rate increase and a number of simplifications are proposed. The two current rates will be uniformized and raised to € 7.91 per 100 litres. The lowest rate of beer duty will be equated with this rate. In addition, the distinction between household use and non-household use for the calculation of the consumer tax for among other things syrups and powders will lapse. Finally, the exemptions for fruit juices and vegetable juices will be abolished in particular cases.


Reintroduction exemption coal tax
On 1 January 2013, the exemption for coal tax for coals fired for the production of electricity was abolished. The government now wishes to reintroduce this exemption. The exemption will then apply to all installations where electricity is generated by means of coal-firing. Due to the agreement to phase out the most polluting electricity production, based on an intended amendment of the Activities Decree, large combustion plants must meet a minimum yield requirement of 38% (and 40% as of 1 July 2017). Coal-fired power stations that do not meet that requirement, will have to close down.


Exemption benefits Article 2-Fund
The government will exempt benefits of the Article 2-Fund (fund for Jewish prosecution victims) as a result of which certain adverse consequences for recipients of those benefits will no longer occur. This fund concerns a compensation scheme for Jewish war victims; approximately 2500 people are entitled to a benefit of € 320 per month.



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