The Dutch Government’s 2021 Tax Plan, unveiled in mid-September, revealed that a planned decrease in the headline corporate tax rate from 25% to 21.7% as of 2021 was being shelved. However, a parallel tax cut for small companies from 16.5% to 15% will still go ahead, applying from 2021 on profits up to EUR245,000, up from EUR200,000 currently (with this threshold increasing further, to EUR395,000, in 2022.)
The plan also includes proposals for a carbon tax from January 1, 2021, at an initial rate of EUR30 per tonne, and on the personal income tax front, contains a planned measure to increase the tax rate on savings and investment income, or “box 3″ income, from 30 to 31 percent from 2021.
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The Netherlands has unveiled proposals for wide-ranging reforms to the country’s tax system. Presenting ‘Building Blocks for a Better Tax System’ in a Parliamentary letter submitted to the House of Representatives on May 18, State Secretary for Finance Hans Vijlbrief unveiled plans to improve and “future-proof” the country’s tax system.
The report is based on the results of 11 investigations into seven “bottlenecks” in the tax regime which lead to unfavorable outcomes. It suggests 169 “building blocks” that political parties could use in future to rebuild the tax system.
According to the Government, the seven bottlenecks include:
A rising tax burden on labor;
Ineffective taxation of the platform and gig economy;
Inconsistent taxation of capital, with some forms of capital income taxed more lightly than others;
Inadequate taxation of profits;
Insufficent “pricing” of pollution through taxation; and
The declining effectiveness of national taxation.
Policy options detailed in the … Read More »
The European Council, with the Netherlands at the presidency helm, last month released its BEPS Roadmap for the short and medium term. It lays out plans for further work on the Interest and Royalties Directive to include further restrictions on interest deductions, and on the Anti Avoidance Directive, with key focus on tightening controlled foreign company rules across the EU. This is perhaps an uncomfortable position for the Netherlands to be in; during much of the BEPS initiative, it remained largely silent on the proposals being put forward, choosing to wait for recommendations. And while it has made a few changes to its laws to reflect certain BEPS developments, in part in line with EU requirements, the Netherlands has not done so with the sheer gusto demonstrated by, say, the UK.
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“The law is an ass” we say in English when the strictly correct application of legal principles by a court leads to a result that any normal right-thinking person would think is absurd; and the German Constitutional Court has just brayed very loudly in saying that the country’s air travel ticket tax does not offend against the constitutional rights of citizens or the airlines. Maybe so, but it and the Court offend against common sense. All taxes are an offence against citizens’ rights when the government that levies them spends the money it collects in a wasteful and unprincipled fashion by providing bread and circuses to voters in order to stay in power, and by that definition most of the money Germany collects is unconstitutional, as is the case in virtually all “advanced” democracies. Well, I won’t mount that particular … Read More »
The EU Commission’s rather curious attack on countries hosting multinationals smacks of politicking, although the machinations of the Berlaymont (have they finished extracting the asbestos yet?) make the word Byzantine seem like an exercise in transparency. At all events, Ireland has hit back quickly and effectively, sensing yet another concealed attack on its low tax rate, which probably does make up a certain proportion of the Commission’s logic. The other two countries in the Commission’s sights, Luxembourg and the Netherlands, are also “the usual suspects,” with low-tax credentials. It may be significant that the Commission has chosen to act in this way at the end of its current term, possibly wishing to send a pro-OECD message to show that it has taken the BEPS initiative seriously, and it is not difficult to imagine that the OECD, which has seen its … Read More »
It seems repetitive to keep on congratulating Hong Kong for sticking to its last, and once again insisting that it will not increase taxes; but to do so against all the pressures for more spending that exist in every State implies a very clear commitment to small government and low taxation. Like Singapore, Hong Kong insists that it will not step onto the primrose path of popular appeasement. There are to be no bread and circuses! In limiting itself to a maximum level of public spending of 20 percent, the administration sets its face against increased debt as much as against increased taxes. For comparison, Denmark spends 67 percent of GDP, and even the USA, which is far from the top of the table, spends 43 percent of GDP, according to OECD figures. And it’s not true that Hong Kong … Read More »
Coffee, anyone, with your double Irish Dutch sandwich? That’ll be Starbucks, then, especially if you’re at say Oxford Circus or Trafalgar Square. The firm has announced that it is moving its European HQ from the Netherlands to the UK. Although the company was fairly unclear about its motives, it can’t be irrelevant that the UK’s corporate tax rate will be down to 20 percent from next year, while the Netherlands sticks with its 25 percent rate and has no plans to reduce it. Of course, that’s not the whole story: the Dutch withholding tax regime is hard to beat, although the UK’s participation exemption is by now not that different from the Dutch regime; and the Dutch patent box rate of 5 percent is still much better than the UK’s 10 percent rate. I would not have guessed that serving … Read More »