Sources in The Hague have confirmed that the Dutch government plans to increase the higher rate of value-added tax (VAT) from 21 percent to 21,4 percent next year, in order to solve the budget deficit. This would lead to higher prices for items such as clothing, cars, and streaming subscriptions.
Standard VAT rate in the Netherlands could increase in 2026
After the government’s initial plans to increase the VAT on books, museums, theatres and sports got a lot of backlash, resulting in the proposal being scrapped, there is now a 1,2-billion-euro hole in the budget that needs to be filled. One solution being considered is raising the standard VAT from the current rate of 21 percent to an even higher 21,4 percent.
The VAT hike would give the government 1,3 billion euros extra for the budget. While it is not certain that this will be the exact increase for the tax, the government is reportedly working on a proposal to submit to parliament in the coming weeks so a decision can be made in the spring of this year.
Getting the plan approved won’t be easy if the proposed VAT hike for recreational activities is anything to go by - people living in the Netherlands do not want VAT to rise. "But the choice is: either a little bit more in many areas or a lot more in a number of specific areas," a source told AD.
Single tax rate for the Netherlands
Another option that was also on the table was to introduce a single VAT rate for all products. Currently, the standard VAT rate is 21 percent and there are also two special tariffs of 9 percent, which applies to common products such as food and medicine, and 0 percent which relates to certain cross-border transactions.
Instead of having several rates, there would be a singular tariff that would be an average of around 17 or 18 percent. However, the government does not plan on moving forward with this idea at the moment as it would result in fruits and vegetables becoming significantly more expensive at a time when the population is in favour of tax exemptions for healthy food to encourage better eating habits.
The other option was to transition certain products and services from the 9 percent VAT rate to 21 percent, but that did not go well for books and other cultural activities. For this reason, they are moving on to a flat increase of the standard VAT rate which mostly covers what is considered “luxury” items such as cars and home renovations, but also includes toilet paper and blankets.
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