On October 15, 2021, the Dutch Government send a.o. a legislative proposal amending the Belastingplan 2022 (the tax package for the year 2022) to the Dutch Parliament for approval. In the new legislative proposal the Dutch Government a.o. proposes to tighten the interest limitation rule that was introduced when implementing Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (ATAD 1) into Dutch law. Furthermore the Government proposes to increase the corporate income tax rate in the 2nd bracket.

 

Tightening of the interest limitation rule

One of the proposed is to tighten the interest limitation rule that was introduced in the Dutch corporate income tax Act per January 1, 2019 when ATAD 1 was implemented in the Dutch corporate income tax Act. Under current law exceeding borrowing costs are only deductible to the highest of the following 2 amounts:

a. 30% of the taxpayer’s EBITDA; or

b. EUR 1,000,000.

 

The legislative proposal that was sent to the Dutch Parliament proposes to lower the ceiling of 30% of the taxpayer’s EBITDA to 20% of the taxpayer’s EBITDA as per January 1, 2022.

 

Corporate income tax rate

 

Current law/2021 situation

Under current law (2021) the Dutch corporate income Act has 2 brackets:

a.  Taxable profits upto and including EUR 245.000 are taxed against 15%.

b.  The amount with which the taxable profit exceeds EUR 245.000 is taxed against 25%.

 

Changes of the brackets

As a consequence of the tax package 2021 (Belastingplan 2021) the brackets for the Dutch corporate income tax will change as follows as per January 1, 2022:  

a.  As per January 1, 2022, taxable profits upto and including EUR 395.000 (was EUR 245,000) are to be taxed against 15%.

b.  The amount with which the taxable profit exceeds EUR 395.000 (was EUR 245,000) is to be taxed against 25%.

 

Change proposed by the amendments sent to the Parliament on October 15, 2021

The legislative proposal that was sent for approval to the Dutch Parliament on October 15, 2021 proposes to increase the corporate income tax rate that applies to the second bracket from 25% to 25.8%. According to the legislative proposal sent to the Dutch Parliament on October 15, 2021 taxable profits will be taxed as follows per January 1, 2022.

a.  The first EUR 395,000 against 15%

b.  The amount with which the taxable profit exceeds EUR 395,000 against 25,8%.       

 

A link to the legislative proposal and links to supporting documents you can find here (all documents are only available in the Dutch language).

 

 

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