2022 Tax Plan: a better tax system
This year, the 2022 Tax Plan package mainly contains minor changes aimed at improving the tax system. In particular, improvements will be made to existing taxes in the areas of housing, employment, greening and business startups. The Tax Plan package therefore contains considerably fewer policy measures than in previous years, in keeping with the government’s caretaker status.
The main changes are set out below.
Working from home
Many employees and employers want to make agreements so that working partly from home can continue, even after the coronavirus crisis. That is why from 1 January 2022 it will be possible to provide a tax-free home working allowance of up to € 2 per day. This is based on a calculation by the National Institute for Family Finance Information (NIBUD) of the average extra costs per day worked from home, for coffee, heating, etc.
Employers already had the option of providing a tax-free allowance for setting up a workspace at home. A tax-free travel-to-work allowance of up to € 0.19 per kilometre will also continue to exist, for days on which an employee goes to the office. The employee and employer can make agreements about the number of days per week on which the employee works from home, so that the employer can pay a fixed allowance. The amount does not need to be adjusted if work is occasionally done at the office on a home working day, or vice versa.
Homeownership-related tax rules and transfer tax will be made fairer from 1 January 2022.
Three changes will be made to the tax rules on homeownership. Unintended effects of the legislation will be eliminated, for example in cases where someone who already owned a home buys a home with a partner. Or where someone owns a home with a partner and the partner dies.
Since 1 January 2021, buyers under the age of 35 have not had to pay transfer tax when purchasing their first home. Buyers aged 35 or over who are going to live in the home themselves pay 2%, while buyers who are not going to live there pay 8%. Under a new government measure, buyers who decide not to proceed with the purchase due to unforeseen circumstances, after signing the purchase contract but before the transfer of ownership, will not automatically pay the 8% rate.
Where housing associations and property developers sell homes to first-time buyers or people with a lower middle income at a substantial discount and later buy them back from those individuals, they will no longer pay transfer tax from 1 January 2022 (this year they have to pay 8%). As a result, these homes will remain affordable for subsequent private buyers.
purchasing power developments are distributed more evenly. The employment tax credit will, however, be phased out a little more slowly.
As of 2 August 2022, parents will get nine weeks of paid parental leave. To partly cover the costs, the maximum income-related combination tax credit will be reduced by € 318 per year from 2022.
Measures to encourage the sale of zero-emission cars (such as electric cars and hydrogen cars) will continue next year. These cars are selling better than expected and this is good for the climate. At the same time, it is costing the government more money than was set out in the National Climate Agreement. Under the agreement, such measures would as a result be scaled back from 2022 onwards. Since climate targets still present a major challenge, the government will continue these measures in 2022. This means that, where employees make private use of company cars, the reduction in the percentage of the vehicle’s value that is added to their taxable income will remain in place until the end of 2025.
However, the maximum vehicle value (or ‘cap’) to which the reduction applies will be lowered sooner than set out in the National Climate Agreement. This means that the maximum vehicle value subject to the 6% reduction applicable from 1 January 2022 will be € 35,000, falling to € 30,000 from 2023. The percentage of the remainder of the vehicle value that will be added to taxable income will be the standard 22%. This will make less expensive, zero-emission cars attractive for the business market. These cars will also be of interest to private individuals on the second-hand market after the lease period.
The environmental investment tax credit percentages will be increased to give businesses an extra incentive to invest in innovative, environmentally friendly business assets. This will allow them to deduct more costs from their taxable profit. From 1 January 2022, the percentages will be increased from 13.5%, 27% and 36% to 27%, 36% and 45% respectively.
Measures for startups
Employers sometimes offer employees stock options instead of a normal salary. Young startups, for example, often offer stock options if they want to attract talented employees but do not yet have enough money to pay a commensurate salary.
Tax is payable on the stock options since they are a form of salary. Tax is currently levied if an employee converts the options into shares. This means that employees (and the employer) have to pay tax immediately whereas they cannot always afford this and are not yet always allowed to sell the shares. From 1 January 2022, tax will therefore normally be levied only once the shares can be traded and money becomes available. Employees can also choose to leave things as they are.
Tackling tax avoidance is one of this government’s priorities. The Tax Plan includes a measure that targets the cause of ‘hybrid mismatches’. Hybrid mismatches enabled businesses to deduct a payment (e.g. interest) from their taxes in one country without it being taxed in the other country, or to deduct a single payment in multiple countries. This policy measure had already been introduced, but it is now being modified so that it better aligns with corporation tax, dividend tax and withholding tax. It will still take effect on 1 January 2022.
Aside from the Tax Plan, another bill that targets the cause of mismatches has been sent to the House of Representatives. Transactions within a group must be conducted in the same arm’s length manner as would be done by independent parties in similar circumstances. In other words, the arm’s length principle must always be adhered to. However, because different countries apply this principle differently or even not at all, differences (‘mismatches’) can arise in international situations that result in part of a group’s profit not being taxed anywhere – i.e. double non-taxation.
Changes in corporation tax offsetting
From 1 January 2022, around 20,000 Dutch businesses will only be allowed to offset advance payments of dividend tax and tax on games of chance (withholding taxes) against payable corporation tax. If no corporation tax is owed in a particular year, the Tax Administration will no longer provide a refund in that year. The business can offset the withholding taxes in a later year against payable corporation tax. This does not have to be done in the very next year; withholding taxes that have not been offset can be carried forward indefinitely to later years. This proposal is based on a ruling by the EU Court of Justice.