Netherlands drops €1,5 billion tax hike for households in 2027

The Dutch government has revised its tax plans for 2027, scrapping a proposed 1,5 billion euro tax increase for households and delaying reforms to the taxation of savings and investments. The proposals would also extend tax deductions for certain healthcare costs, but still need parliamentary approval.

Dutch government drops €1,5 billion tax increase for 2027

The government plans to scrap the freedom contribution (vrijheidsbijdrage) for households in 2027. The proposed measure would have raised 1,5 billion euros through income taxes to help fund increased defence spending.

According to AD, the government instead plans to use money previously reserved to help businesses cover electricity costs. As a result, significantly less funding would be available for this support from 2029.

Scrapping the contribution is intended to ease the financial burden on households in 2027, although the impact will vary depending on individual circumstances. The change would apply to 2027 only, and the revised tax plans still need parliamentary approval.

Dutch box 3 tax reform delayed until 2029

The government also plans to postpone its new box 3 tax system from 2028 to 2029. Box 3 is the part of the Dutch income tax system that covers savings, investments and other assets, including second homes. The proposed reform would move towards taxing investment gains when they are realised, rather than taxing annual increases in value.

The delay follows concerns from the Dutch Tax Administration and banks about implementing the changes in time. The Council of State has recommended waiting until 2030, warning that the proposed changes are too complex to introduce by 2028.

The government has also withdrawn plans that could have brought approximately 850.000 additional savers and investors into box 3 taxation. However, the revised reforms are not yet final, and the proposed 2029 implementation date remains uncertain.

Healthcare tax deductions extended and VAT increase postponed

The government also plans to keep tax deductions for certain healthcare expenses until 2030, reversing an earlier proposal to abolish them in 2028. These deductions allow people to claim tax relief on qualifying medical expenses, such as certain medical aids and prescribed diets.

According to AD, the extension follows requests from opposition parties concerned about the financial impact on people with high healthcare costs. The measure would give affected households another two years of access to the existing tax relief.

Meanwhile, the planned VAT increase on flowers and plants would be postponed from 2028 to 2029. These products would continue to fall under the reduced 9 percent VAT rate for another year, rather than moving to the standard 21 percent rate.

The revised tax plans are not yet final. The Dutch House of Representatives is scheduled to debate the proposals on Wednesday, November 4, with opposition parties expected to push for further changes before parliamentary approval.