The Netherlands 2017 Budget Issued with Payroll Changes

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By Jared Mondschein

Sept. 30—Individual income tax rate and threshold increases and other payroll-related provisions are included in the Netherlands 2017 budget submitted to parliament by the Ministry of Finance Sept. 20.

Under the proposed employment income tax changes for individuals under retirement age:

• The first income tax bracket's threshold would increase to 19,982 euros ($22,458) from 19,922 euros ($22,390) while the rate would increase to 8.9 percent from 8.4 percent.

• The second income tax bracket's threshold would increase to 33,791 euros ($37,976) from 33,715 euros ($37,890) while the rate would increase to 40.8 percent from 40.4 percent.

• The third income tax bracket's threshold would increase to 67,072 euros ($75,381) from 66,421 euros ($74,649) while the 52 percent tax rate would remain unchanged.

Health Insurance Contributions Decrease: Employer contributions for employee medical benefits, effective Jan. 1, 2017, would decrease to 6.65 percent of employee wages from 6.75 percent while the maximum salary contribution base would increase to 53,697 euros ($60,329) from 52,763 euros ($59,280).

Company Cars: Beginning Jan. 1, 2017, only two classes of taxation for private usage of company cars would exist: zero emission cars would be taxed at 4 percent while non-zero emission cars would be taxed at 22 percent.

CO2 tax rates are currently 4 percent for zero emission cars, 15 percent for cars with a CO2 emission of up to 50 gr/km, 21 percent for cars with a maximum emission of up to 106 gr/km and 25 percent for cars with an emission exceeding 106 gr/km.

The intention to shrink the number of classes for private usage of company cars was previously announced in 2015.

Salary Requests to End: Effective Jan. 1, 2017, Dutch tax authorities will no longer ask employers for information on the annual salary of employees. The bill clarifies that numerous improvements to the payroll tax return process have allowed for the Netherlands to no longer need this option to obtain salary data on employees when the payroll records were either incomplete or incorrect.

The budget also includes modifications to tax benefits for start up companies and organizations engaging in research and development activities as well as clarification on transfer pricing issues.

To contact the reporter on this story: Jared Mondschein at jmondschein@bna.com

To contact the editor responsible for this story: Michael Baer at mbaer@bna.com

For More Information

The budget documents are available in Dutch at https://www.rijksoverheid.nl/ministeries/ministerie-van-financien/documenten/begrotingen/2016/09/20/miljoenennota-2017.

Tax measures related to the budget are available in Dutch at https://www.rijksoverheid.nl/onderwerpen/belastingplan.

More information on payroll issues in the Netherlands can be found in the Netherlands country primer.

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