Prinsjesdag 2024: the main changes for entrepreneurs

On September 17, it was time again for Budget Day, the day when the new cabinet plans are presented. The new cabinet has announced quite a few new plans this year. There are important changes coming for entrepreneurs, such as adjusted tax rates, new VAT rules and changes in deductions. Some tax breaks, such as the self-employed deduction, are also under review. To bring you up to speed on the consequences of the new cabinet plans, we have summarized the most important changes for you.

1. Lower tax rate box 2

Do you have a substantial interest in a company, for example by owning at least 5% of the shares or profit-sharing certificates? If so, you must pay tax on the income you derive from this substantial interest, such as dividend and sale proceeds from shares. This income falls under Box 2 of the income tax.

Since the beginning of 2024, there are two tax rates in Box 2. A rate of 24.5% currently applies to income up to €67,000. This rate will remain the same in 2025, but will apply to an amount up to € 67,804. Income above this amount is now taxed at 33%. Starting in 2025, this higher rate will be reduced to 31%.

Do you have a tax partner? Then you can split the income from the substantial interest. This means that you can apply the lower rate of 24.5% twice. On the joint income of € 135,608 (twice € 67,804) you will then pay the reduced rate of 24.5%.

2. Reduction of both the SME profit exemption and the self-employed deduction

The previous administration had the plan to lower the SME profit exemption to 12.03%. This plan has since been reversed. Starting in 2025, the SME profit exemption will be reduced from 13.31% to 12.70%.

The self-employment deduction will also be further reduced to make salaried and entrepreneurial work more equal. The self-employment deduction is a tax benefit that allows entrepreneurs to deduct a certain amount of their profits in income tax. With the condition that they work a minimum of 1,225 hours per year as an entrepreneur. In 2025, the amount will be reduced to €2,470, a reduction of over €900.

3. Revision of business succession scheme, carry forward scheme and inheritance tax

From January 1, 2025, there will be some changes to the business succession regime (BOR). The Cabinet has proposed reducing the mandatory continuation period for business acquisitions from five to three years.

From Jan. 1, 2026, the BOR and the pass-through scheme (DSR) will apply only to ordinary shares with a minimum interest of 5%. Options and profit certificates will be excluded from these schemes. Furthermore, it will become easier to restructure a company without losing the tax benefit of the BOR, and stricter requirements will apply to entrepreneurs who start a business after their state retirement age.

The gift and inheritance tax exemption will also be increased from 2025. For businesses with a value up to €1.5 million, the tax exemption will remain full, while above this amount the exemption will drop from 83% to 70%.

Note: real estate that you rent out to third parties will no longer be considered business assets as of Jan. 1, 2024, which means you can no longer use it for the BOR.

4. Abolition of corporate gift deduction

As of January 1, 2025, the gift deduction in the corporate income tax will be abolished. This means that donations from your company to charitable or socially beneficial organizations can no longer be deducted from the profit. For entrepreneurs in other legal forms, such as a sole proprietorship or partnership, the rules regarding the gift deduction remain unchanged. The gift deduction in the income tax also remains unchanged.

The gifts you make from your company will be treated as dividend payments to you in private from 2025. As a result, they will be subject to dividend tax and fall under the aforementioned Box 2 of the income tax.

If you contribute to charities through sponsorship or advertising, these expenses are considered business expenses and remain deductible from profits. This also applies to expenses you incur as part of Corporate Social Responsibility (CSR).

5. Motor vehicle taxes for emission-free cars

Currently, owners of emission-free cars (hydrogen-powered or fully electric) do not pay motor vehicle tax (road tax). From 2025 this will change, and motor vehicle tax will be levied. It was announced during Budget Day that the tax credit for these cars will be phased out from 75% in 2025 to 0% in 2031.

However, when these plans were drawn up by the previous administration, the extra weight of the batteries in electric vehicles was not taken into account. As a result, electric cars are heavier and pay more motor vehicle taxes. In addition, more electric cars have been sold than originally expected. These two factors resulted in a setback of 1.5 billion euros. To close this budget deficit, it was decided after Budget Day to reduce the tax credit to 25% in 2025. In 2031, the tax credit will be completely eliminated.

6. Energy tax reduction

Businesses that use gas or electricity for their business activities will receive a significant reduction in taxes from January 1, 2025. The energy tax rate on natural gas will be reduced, meaning you will pay less. From that date, you will pay €0.028 per m³ of gas, and this reduction applies to consumption up to 170,000 m³ per year.

7. Increase in VAT rate books, culture, art, accommodation and sports

You have probably already seen it mentioned. From January 1, 2026, the VAT rate on books, culture, art, overnight stays and sports will go up significantly. The current 9% VAT rate will be increased to 21%. This increase affects a broad group of entrepreneurs, such as sports instructors and organizers of concerts and performances. This means that as a business owner, you will have to pass on more VAT to your customers starting in 2026, increasing prices for museums, concerts and books, among other things.

However, there are a few exceptions. For example, cinemas, circuses, camping sites and day recreation will continue to fall under the low rate of 9%. Non-commercial sports associations also retain their exemption.

Note that the VAT increase depends on when the service is provided. Are you selling a ticket in 2025 for a performance in 2026? Then the new 21% rate already applies.

8. Reduction in transfer tax on homes you do not live in yourself

Interested in an investment property or vacation home? As of January 1, 2026, the transfer tax for homes that you do not live in yourself will be reduced from 10.4% to 8%. This lower rate applies to investment properties and vacation homes, making it more attractive to purchase (new construction) homes for rental. For owner-occupied homes, the transfer tax rate remains at 2%, unless you qualify for the starter exemption. The starter exemption is a one-time exemption for first-time buyers under the age of 35.

Note that this reduction is not yet officially enshrined in a bill, but there are plans to introduce it in October 2024.

9. Expansion of small business scheme

The expansion of the small business scheme (KOR) was not announced during Budget Day, but was announced by the Tax Administration a week earlier. As of January 1, 2025, the KOR will be expanded. Previously, only entrepreneurs established in the Netherlands could make use of this scheme, but as of this year entrepreneurs from other EU member states can also apply the KOR. This is possible if their turnover in the EU, including the Netherlands, amounts to a maximum of €100,000.

10. Eased disability insurance for self-employed?

The compulsory disability insurance (AOV) for zzp’ers, like the KOR, was not announced during Prinsjesdag. However, it appears that this regulation may take effect in 2027 or later. Previously, my colleague Judy Sliepen wrote an article on the future of the disability system.

The mandatory AOV is designed for business owners who file a profit tax return. DGAs with a PLC are excluded from this obligation. This AOV offers a benefit of 70% of the profit before disability, with a maximum equal to the legal minimum wage. A waiting period of one year is established; during this period you will not receive any benefit. You will also not receive benefits as long as you can earn the minimum wage yourself, even if it is with other work. The insurance runs until your state pension age. The premiums are about 6.5% of your income and are a maximum of 142.68% of the legal minimum wage.

There will be a transitional arrangement for entrepreneurs who already have an AOV. If your existing insurance meets certain conditions, you can remain insured through your current insurer.

11. Relaxation earnings stripping measure

Under the earnings stripping measure, an entity subject to corporate income tax may not deduct on balance more interest than 20% of the adjusted profit. If this percentage is less than €1 million, that amount is the maximum. The new government aims to bring the interest deduction limit more in line with the European average. Therefore, the deduction maximum will be increased from 20% to 25%, which will give companies more room to set off interest.

For real estate entities that lease real estate to third parties, the threshold of €1 million will disappear as of January 1, 2025. This means that they can deduct a maximum of 25% of their (adjusted) profit in interest.

Please note that this rule does not apply to real estate leased to affiliated entities or affiliated natural persons.

12. Change compensation for transition compensation

As an employer, you are obliged to continue paying wages to a sick employee. After two years of illness, you have the option to request dismissal from the UWV. In that case, the employee is entitled to transition compensation. Since the beginning of 2024, this maximum has been set at €94,000. Should the employee’s annual income be higher, a maximum of one gross annual salary applies.

Moreover, employers can request compensation for the transition compensation paid when they dismiss this employee. However, as of July 1, 2026, the compensation scheme will be changed. Only employers with fewer than 25 employees will retain the right to compensation, while larger employers will lose this benefit.

13. Corporate tax rates unchanged

The corporate income tax rates will remain unchanged in 2025. The bracket limit will also remain as is. Up to a profit of € 200,000, you will pay a rate of 19% in the first bracket. If the profit exceeds € 200,000, the additional amount falls into the second bracket with a rate of 25.8%.

14. Reduction of tax benefit for highly skilled foreign workers.

As of 2027, the tax benefit for highly skilled foreign workers (expats) will be reduced. Now expats can receive an annual tax benefit of 30% on their salary through their employer. From 2027, this will change to 27%. In addition, the salary standard will be raised to €50,436.

Questions?

Do you have any questions as a result of this article? Or do you have other questions as a result of the new government plans and would you like to know what this means for your position as entrepreneur? Please contact one of our lawyers by mail, telephone or fill in the contact form for a free initial consultation. We will be happy to think along with you.