Prinsjesdag 2024 results are here. How does it affect your next financial year?
What is Prinsjesdag?
Wondering what this day is about? We wrote an article explaining Prinsjesdag, also known as Budget Day, and why is it important for all taxpayers to mark this day in their calendars. You can read it here.
What are the outcomes?
On September 17, 2024, the Dutch nation not only witnessed the Prinsjesdag festivities of this year but we were also presented with the plan of changes for the upcoming financial year and adjustments in the national budget. This announcement included new VAT rules (which affect the cost of goods and services that the public purchases), discounted taxes for environmentally-friendly investments, changes to the 30% ruling, and, most important to us, as your financial advisors, income tax and adjusted margins for tax boxes. Keep on reading to find out what outcomes of the Prinsjesdag speech we find important in relation to your personal finances and what you can do with this knowledge to ensure that you are prepared for the upcoming year.
Information for employees
- Lower income tax for the first bracket of Box 1
Most tax-paying residents of the Netherlands belong to Box 1, which includes incomes from employment, freelance income, and primary residence. In the upcoming year, Dutch residents will have to pay less income tax. During Prinsjesdag a lower first tax bracket was introduced, of a 35.82% rate for income up to €38,441.
Here are the new margins for tax brackets in Box 1:
35.82% for income between € 0 and € 38.441
37.48% for income between € 38.441 and € 76.817
49.50% for income above € 76.817
- Adjustment to the top rate of Box 2
Individuals pay taxes in Box 2 if they have income from share ownership of over 5%. In 2024, the tax for income from a substantial interest in companies that one is working in is set at 24.5% for earnings under €67,000 and at 33% for that above. In 2025, the plan is to lower the top rate to 31%, resulting in substantial interest holders paying less tax if their income exceeds €67,804.
- Change in 30% ruling for expats
The government decided to change the expat scheme of 30% ruling and scale it down to 27%. To our expat readers, do not worry, this will take effect in 2027. The only thing to note for 2025 and 2026 is that the upper limit of the salary criteria will be adjusted annually based on inflation, the standards are to increase from the current €46,107 to €50,436.
Information for freelancers / entrepreneurs / ZZP
- Self-employment deduction will drop
Over time we noticed that this fixed amount that an entrepreneur may deduct from their profit annually is getting more and more reduced. This is also the case for the upcoming year, with the number going from €3,750 in 2024 to €2,470 in 2025. This decision was made to reduce tax differences between self-employed entrepreneurs and employees.
- Reduction of SME profit exemption
The SME profit exemption (in Dutch – MKB) means a reduction of your taxable profit, the higher the profit exemption – the less income taxes you pay. For years, this benefit for entrepreneurs has been amounted to 14%, and starting this year has been lowered to 13.31%. From 2025, the profit exemption will be 12.7%.
Information for your investments
- Transfer tax for non-residential property is lowered
In the Netherlands, you pay property transfer tax when you obtain real estate property. In 2024, the transfer tax for the investment property (non-residential) the transfer tax is 10.4%. With the newly announced changes in the national budget, a transfer tax reduction for a second property is set, which will amount to 8%.
- Box 3 remains unchanged
Dutch residents pay tax in Box 3 if they own savings and investments, including shares less than 5%. Despite earlier discussions to reduce the Box 3 rate, it was announced that it will remain at 36%. The tax-free capital will be up to € 57.684 in 2025.
How will these outcomes affect your finances in 2025?
We have stated the relevant changes in financial regulations and taxes for the upcoming year. What should you do now? We advise going through these outcomes and figuring out which ones are applicable to your own situation. With this knowledge, you can have an approximate prediction of how your future annual revenue will look, whether you will pay more or fewer taxes, and whether you will get from the government more or less money back during the tax return season. Do not worry if this news seems big, the House of Representatives and the Senate will still put this plan for debate, and we will make sure to keep you posted on any relevant changes.
Have questions or need help with calculations? TaxSavers can help you with this as well as provide practical advice on what you can do now to save time and money later. You can contact us via this form and we will get back to you as soon as possible.
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