Preview Budget Day 2020 (Tax Plan 2021)

Topicality | 3 September 2020

Budget Day (also known as Prinsjesdag, or ‘Prince’s Day’), on the third Tuesday in September, is when the government announces its plans for the upcoming tax year. Just like every year, some plans have already been leaked. So below we will discuss ‘leaked’ future tax measures which probably will be announced on Budget day 2020 ‘Prinsjesdag’ September 15.

Corporate income tax

It was proposed to further lower the CIT rates 2021 for profits. However these plans have changed because of Covid-19 pandemic. The profits in the second bracket will still be taxed at 25%. But the amount for the second corporate tax bracket will be increased from €200,000 to €400,000. Nevertheless, the corporate tax rate in the first bracket will still be lowered from 16,5% to 15%. So, up to €400,000 the companies have to pay 15% CIT and above €400,000 the 25% still applies from 2021.

Property transfer tax

Currently, home buyers will have to pay 2% transfer tax when buying real property. In 2021 starters on the housing market do not have to pay the 2% transfer tax anymore. The transfer tax will be abolished for these starters.  However starters can only use this exemption if they are going to live in the purchased real property (home) themselves.

On the other hand, in case of buying a second home or other real property (i.e. business real estate or real estate for investment purposes) the transfer tax rate will become 8% instead of 2%-6%.

Income tax

The first bracket of the income tax will decrease slightly. Besides, the employed person’s tax credit, a tax benefit for all workers, will increase. Furthermore, the ‘self-employed person deduction’ will be reduced further. This tax benefit for self-employed persons has already been decreased and will now be lowered to €3,200.

Box 3 (private savings and investments)

Tax payers pay income tax in box 3 on their fictitious income from net assets (savings and investments). However part of the net assets are exempt in box 3. The tax free part was €31.000 (per individual) and this amount will be increased to €50.000 per tax payer and € 100.000 for tax partners in 2021.

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Author

Marc Derks