The Netherlands - Budget 2018
On 19 September 2017 the Dutch government released its Budget 2018 containing the Tax Plan 2018 which includes certain amendments to Dutch tax law.
After the general elections held on 15 March 2017, the Netherlands is still run by a care-taker government composed of the Liberal Party and the Social Democrats. Four parties (Liberal Party, Christian Democrats, Liberal Democrats and the Christian Union) have been negotiating the formation of a new coalition government for quite some time and the general expectation is that a coalition agreement will be concluded in the next weeks, followed by the installation of the new government by King Willem Alexander.
The Budget and Tax Plan 2018 that was released today in the interregnum after the general elections is a reflection of the limited political leeway for the care-taker government; it is not controversial and also not very ambitious. Important political issues and potentially controversial choices are carefully avoided and left for the new government to deal with. As a result, there are various important tax policy issues that are not addressed in the Tax Plan 2018 but that will be high on the agenda of the new government. These include the implementation of the ATAD I package pursuant to which earning stripping measures and Controlled Foreign Company rules will be introduced in the Corporate Income Tax Act (a legislative proposal is announced for the beginning of 2018). Later this year, a bill will be submitted to Parliament to ratify the Multilateral Convention implementing tax treaty measures to prevent Base Erosion and Profit Shifting. In addition, it is possible (but not yet certain) that the new government may reduce the corporate income tax rate which is currently 25%. Furthermore, the introduction of a simpler flat personal income tax with two rates is being considered and the 30% facility for expatriates could be curtailed.
The Tax Plan 2018 contains a number of legislative proposals (hereafter also referred to as the Bill) which are summarized below. The government will discuss the Bill in the coming weeks in parliament. Further to these discussions, some elements of the Tax Plan 2018 may change. Most proposals will become effective on 1 January 2018.