On the bright side, there's a modest recalibration of the thresholds for higher tax rates. For non-pensioners, the general tax rate will experience a marginal uptick, rising to 36,97%. On the other hand, the higher rate will kick in for earnings above 75.518 euros, reaching 49,5%. This adjustment provides a bit of relief for individuals in the lower income brackets, although the impact may be overshadowed by other changes on the horizon.
Conversely, those relying on income from their own companies are bracing for less favourable adjustments. A noteworthy alteration comes in the form of two brackets in Box 2 for dividends, signalling significant consequences. Individuals accustomed to drawing a minimal salary and augmenting their income with dividends are poised to face heightened tax burdens. The once advantageous scenario for initiating a B.V. limited company now presents a less attractive proposition.
Under the revamped system, dividends up to 67.000 euros will be subject to a tax rate of 24,5%, while amounts exceeding this threshold will incur a higher rate of 33%, diverging from the previous flat rate of 26,9%. This shift aims to recalculate the taxation dynamics for those leveraging dividend-based income, potentially reshaping the strategies of many small business owners.
Fictive self-employment emerges as another focal point for the government. They will target companies that, under the guise of self-employment, sidestep social security premiums by employing a substantial number of workers. This practice, known as "fake" self-employment, is set to face stricter regulations.
The proposed changes include a minimum hourly wage of €30 for freelancers and assessments to ascertain the authenticity of the employment relationship. The tax office is poised to scrutinise individuals who, despite being labelled as self-employed, function more like traditional employees. This is particularly pertinent for large companies, such as food delivery and ride-sharing apps, who rely heavily on self-employed workers. The intent of this change is clear: to ensure fair employment practices and to prevent the exploitation of self-employment statuses for financial gain.
Amidst these adjustments, property investors are bracing for a less favourable environment in the upcoming year. Legislation scrapping two-year contracts for tenants has already passed through the Dutch Senate. Further, additional proposals for rent control on more apartments, particularly those catering to "middle" incomes, are making their way through parliament with broad support. The combination of these changes could potentially impact the profitability of property investments, prompting landlords to reassess the viability of their ventures.
However, uncertainty looms over other policy proposals, including the fate of virtually free childcare and the reform of "Box 3" - which deals with assets. Tax assessments in 2024 will incorporate a presumed gain of 1,03% on savings and 6,04% on other assets (excluding the primary residence), with debts subtracted at 2,7%. The current tax rate of 36% on this assumed gain may prompt investors to rethink their financial strategies and portfolio allocations.
While the 30% ruling remains unaffected for existing recipients, new applicants face a diminished tax break. This shift raises concerns amongst employers who rely on skilled foreign workers, as the reduced incentive may pose challenges in attracting and retaining top talent.
Against the backdrop of these fiscal changes, the overarching economic conditions in the Netherlands add another layer of complexity. The nation finds itself in its third quarter of a recession and the Dutch Central Bank (DNB) has issued warnings of minimal economic growth due to sluggish global trade. In this context, the anticipated changes in taxes and benefits are limited. The prevailing economic challenges may constrain the ability of a new government, when formed, to enact sweeping changes.