Proposed changes Dutch income tax rates 2021 and further
Income tax (box 1)
As per January 1st 2020, a two-bracket system was introduced for the personal income tax. The lowest tax bracket (up to an income of EUR 68.507) is taxed against a rate of 37,35%. The highest bracket (for an income exceeding EUR 68.507) is taxed against a rate of 49,50%. These tax rates apply for the fiscal year 2020.
The Government has announced that they will reduce the tax rate in the lowest bracket in stages. The tax rate in the highest bracket will remain 49,50%:
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| Bracket 1 | 37,35% | 37,10% | 37,07% | 37,05% | 37,03% |
| Bracket 2 | 49,50% | 49,50% | 49,50% | 49,50% | 49,50% |
People entitled to an AOW pension do not pay any AOW premium. For that reason, the three-bracket system still applies to them:
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| Bracket 1 | 19,45% | 19,20% | 19,17% | 19,15% | 19,13% |
| Bracket 2 | 37,35% | 37,10% | 37,07% | 37,05% | 37,03% |
| Bracket 3 | 49,50% | 49,50% | 49,50% | 49,50% | 49,50% |
Tax credits
- As per 2021, the general tax credit (algemene heffingskorting) will be increased from EUR 2.711 to a maximum of EUR 2.837. This tax credit is income related;
- As per 2021, the employed person’s tax credit (arbeidskorting) will be increased from EUR 3.819 to a maximum of EUR 4.205. This tax credit is income related;
- As per 2021, the elderly person’s tax credit (ouderenkorting) will be increased from EUR 1.622 to a maximum of EUR 1.703;
- As per 2021, the single elderly person’s tax credit (alleenstaande ouderenkorting) will be increased from EUR 436 to EUR 443;
Self-employed deduction
Last year, the Government already announced the phasing out of the self-employed deduction. This phasing out will be accelerated as from 2021. The current self-employed deduction of EUR 7.030 will be reduced with EUR 360 every year until 2027, after which the reduction will be EUR 110 every year until EUR 3.240 in 2036.
Income tax (box 3 = equity tax)
A legislative proposal has been submitted to increase the tax-free threshold in the context of the investment yield tax (box 3). The tax-free threshold previously was EUR 30.846 (2020), and will be EUR 50.000 in 2021. For fiscal partners this is EUR 100.000.
In order to be able to finance this higher tax-free threshold, the applicable tax rate in box 3 will be increased from 30% (2020) to 31% in 2021.
Because the tax rate of 31% is being calculated on a notional yield (and not on the actual realized yield), the effective tax burden in box 3 will be as follows:
| Assets for an amount of | to | Effective tax burden |
| 0 | 50.000 | 0 |
| 50.000 | 100.000 | 0,59% |
| 100.000 | 1.000.000 | 1,40% |
| > 1.000.000 | 1,76% |
Corporate income tax
Last year, the Government announced that the corporate income tax return would be lowered from 16,5% to 15% (low rate), and from 25% to 21,7% (high rate). These plans have slightly changed. As from 2021 the high rate will remain 25%. Also the bracket limits are changing:
| 2020 | 2021 | 2022 | |
| Tax rate bracket 1 | 16,5% | 15% | 15% |
| Tax rate bracket 2 | 25% | 25% | 25% |
| Bracket limit | EUR 200.000 | EUR 245.000 | EUR 395.000 |
