Budget Day 2023: wage taxes

Particularly due to the outgoing status of the current Dutch cabinet, the adjustments to legislation in the 2024 Tax Plans in the field of payroll taxes this year are rather limited. Nevertheless, it is important to take notice of this.

Increase in travel allowance

In the 2024 Tax Plan is announced that the maximum amount of the targeted exempt travel allowance for business kilometers (including commuting) will be increased to € 0.23 per kilometer. This is € 0.01 higher than announced in the 2023 Tax Plan for the year from 1 January 2024.

Free space of the work-related costs scheme

From January 1, 2024, the percentage of the first bracket (wage sum up to € 400,000) of the free space of the work costs scheme will be reduced again from 3% to 1.92%. The percentage for the second bracket (wage sum from € 400,000) remains 1.18%.

Changes in legislation on public transport cards (OV-kaart) and discount hour cards (voordeelurenkaart)

The current tax rules regarding public transport cards and discount hour cards are complex and administratively cumbersome. When reimbursing or providing a public transport subscription or discount hours card, the costs are specifically exempted (provided that the costs are designated as work costs and is customary), insofar as business use is concerned. The employer must check whether the costs of the reimbursement or provision are not higher than the actual costs of business use. Any difference is taxed in principle. When a public transport subscription or a discount hours card is made available by the employer, a zero rating applies (provided that the costs are designated as work costs and is customary). As long as the employee travels at least 10% for business purposes with a public transport subscription or a discount hours card, the total costs can be brought under the free space of the work-related costs scheme at a value of nil.

The outgoing cabinet announces in the 2024 Tax Plan to specifically exempt the whole (private and businesslike) use of a public transport card and discount hour card that is reimbursed, issued or made available to the employee. The result is that, regardless of how an employer offers a public transport card to its employee, no tax is due, provided that the employee also uses the public transport card (to whatever extent) for business travel (including commuting). The employer only needs to make this plausible.

Expansion of low Awf premium for full-time employment contract

Under current Dutch social security legislation and regulations, employers must revise the Awf premium retroactively to the beginning of the calendar year from the low Awf premium to the high Awf premium, if it appears that an employee has worked more than 30% overtime, compared to the hours laid down in his employment contract. There is an exception to this rule for employees who have a contract for more than 35 hours per week. According to the 2024 Budget Memorandum, this limit will be reduced to 30 hours per week.

Repair collection preservative assessment

The Excessive Borrowing from Own Company Act came into effect on January 1, 2023. In short, this law regulates that in the event that a substantial interest holder has a loan for more than € 700,000

(maximum amount) from his own company, the excess part is taxed as fictitious regular benefit in box 2 of the Dutch Income Tax Act.

The outgoing cabinet proposes repairs to parts of the Collection Act 1990 (‘Invorderingswet 1990’) with regard to the collection of a preservative tax assessment in the event of excessive borrowing, which

arise from the Excessive Borrowing from Own Company Act. This concerns repairs of undesirable outcomes that may occur as a result of this law when the substantial interest holder has emigrated and a preservative measure has been applied for, has been assessed a tax assessment for which payment has been deferred. These repairs will:

1. after emigration, the deferment of payment of the protective tax assessment only expires to the extent that an increase in debt has not previously led to withdrawal of the deferral of payment and

2. collection of the preservative tax assessment after emigration will not take place to the extent that excessive borrowing is made from companies in which the tax debtor has acquired a substantial interest after emigration and where the benefits from those companies do not form part of the taxable income in the Netherlands from a substantial interest of the tax debtor belong. The collection of the preservative tax assessment will only take place insofar as excessive borrowing is made directly or indirectly from companies for which the tax debtor has been granted deferment of payment for the protective tax assessment and insofar as an increase in debt has not previously led to withdrawal of the deferral of the tax assessment payment.

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