Dutch parliament approves 2027 Tax Plan by two votes

The Dutch House of Representatives has approved the Netherlands' 2027 Tax Plan, including changes that would limit a planned income tax increase while raising taxes on wealth. The legislation passed by just two votes on Thursday, November 12, despite opposition from governing party VVD and growing tensions within the Dutch coalition.

Dutch tax deal shifts proposed tax burden towards wealth

Under the agreement reached by the four parties on Wednesday, November 11, approximately 1 billion euros in additional annual tax revenue would be raised through measures targeting wealth. Around 900 million euros would be used to limit a planned increase in the lowest income tax rate in box 1, which covers income from work, pensions and home ownership.

The amendment would introduce a new top tax rate of 38,5 percent in box 3 for annual savings and investment returns exceeding 60.000 euros, rather than for assets valued above that amount. Meanwhile, the standard box 3 rate would decrease from 36 percent to 35,5 percent. According to the Ministry of Finance, the additional tax rate could be implemented from 2029.

Other measures include tightening the rules on "gifts on paper", where money is formally promised without being transferred immediately, potentially reducing inheritance tax. Certain tax thresholds in box 2, which covers income from substantial shareholdings and in inheritance and gift taxes would also be frozen between 2027 and 2031.

Around 400 million euros of the proposed revenue would come from measures that have yet to be fully worked out, potentially including a tax on wealthy individuals moving abroad. The agreement would also leave a decision on a further 1,9 billion-euro increase in the freedom contribution, a tax measure intended to help fund defence spending, to the 2028 Tax Plan.

Questions remain about who would benefit from the proposed changes. During Thursday's debate, 50PLUS leader Jan Struijs questioned whether around 900.000 people receiving only the Dutch AOW state pension would benefit from the income tax reduction, citing calculations commissioned by his party. PRO leader Jesse Klaver said he had not seen those calculations, according to NOS.

Dutch tax agreement sparks tensions within governing coalition

The agreement has exposed divisions within the minority government, as D66 and CDA reached the deal with PRO and Volt without the support of their coalition partner, the VVD. VVD leader Dilan Yeşilgöz criticised the proposal on Wednesday, calling it "a bad deal" that went against the coalition agreement, according to NOS.

During Thursday's debate, VVD parliamentary leader Ruben Brekelmans warned that his party would vote against the entire 2027 Tax Plan if the amendments passed. Echoing an earlier demand by VVD leader Dilan Yeşilgöz, he also called for a "fundamental reset" of the coalition regardless of the voting outcome, according to ANP. The VVD subsequently voted against the legislation, despite being part of the governing coalition.

The cabinet had formally advised parliament against adopting the amendment. In a letter to the Tweede Kamer, the government argued that the proposal lacked sufficient financial backing, as some of the expected tax revenue had not yet been secured. It also warned that introducing an additional box 3 tax rate would make the Dutch tax system more complicated, according to NOS.

The dispute could also affect a separate reform of box 3, intended to tax savings and investments based on actual returns. JA21, BBB and SGP have threatened to vote against the legislation if the proposed wealth-tax changes are adopted. Their opposition could complicate the reform's passage through the Dutch Senate (Eerste Kamer)

Prime Minister Rob Jetten acknowledged that relations between the three coalition parties were strained and called for a "serious fresh start". He said further discussions were needed to improve cooperation, but made clear that he wanted D66, CDA and VVD to continue governing together, according to NOS.

Dutch parliament approves 2027 Tax Plan by narrow majority

The Tweede Kamer approved the 2027 Tax Plan on Thursday evening, November 12, with 76 MPs voting in favour and 74 against, according to NOS. Earlier in the evening, the proposed tax amendment from PRO and Volt had passed with 79 votes, including support from governing parties D66 and CDA.

The overall Tax Plan secured support from D66, CDA, PRO, Volt, 50PLUS, Party for the Animals, ChristenUnie and DENK. The VVD voted against the legislation, despite being part of the governing coalition.

Party for the Animals had initially opposed the overall Tax Plan but changed its position following an agreement with D66 and CDA. According to NOS, the party secured commitments to increase taxes on private jets and abandon a proposed increase in train ticket prices.

The result has deepened the disagreement within the coalition, although Prime Minister Rob Jetten has said he wants D66, CDA and VVD to continue governing together. The approval of the Tax Plan does not mean the coalition's differences have been resolved.

The legislation must still be approved by the Dutch Senate before becoming law. Most measures are intended to take effect on January 1, 2027, while certain proposed changes to wealth taxation would be implemented later.