On September 15, Prinsjesdag took place in The Hague, with the annual budget for 2021 revealed by the Dutch government and a speech given by the Dutch king.

Prinsjesdag 2020 

It was a very different Prinsjesdag than usual. King Willem Alexander gave his annual speech, although without the royal carriage or the reams of spectators. He spoke of the impressive resilience of the people of the Netherlands during the coronavirus pandemic. There is an air of uncertainty at the moment, he says, and he calls on people to keep up the resilience, solidarity and flexibility for as long as it takes, and he hopes that this will give us confidence for the future. The good news, overall, is that the Dutch government is investing in job retention, public facilities, strong economic structure and a cleaner, greener future.

How is the Dutch economy doing?

The big question for anyone working in the Netherlands is how, when and to what extent the economic downturn due to the coronavirus will affect public finances in the long term. According to CBP, the Dutch economy will grow by 3,5 percent next year. Thanks, in part, to the support package for companies, unemployment is at the rate of 5,9 percent as opposed to the previously feared rate of 6,5 percent.

Here are the main points regarding the Dutch economy:

• The economy will contract by 5 percent in 2020 but will grow by 3,5 percent in 2021 provided there is no second lockdown
• National debt will reach 60 percent of GDP
• Unemployment will be at 5,9 percent
• Higher spending on unemployment benefits will reach an overspend of 230 million euros

2021 Dutch governmental budget

Here are the main points revealed in the 2021 budget:

Income and taxes

Regarding taxation in the Netherlands, multinational companies will be taxed more. The corporate tax paid by companies is going to be made more consistent so that companies that avoid tax payment by exploiting the differences between tax systems will be adjusted. In short, tax avoidance is being tackled more harshly than ever.

There will be better tax relief: savers and small investors will no longer pay taxes on assets up to 50.000 from 2021. Everyone with savings or invested capital up to 220.000 per person will pay less tax on it. Taxes will be reduced for entrepreneurs and self-employed people, reducing the differences in tax rates between employees and the self-employed.

The tax rate on incomes of up to 68.507 euros, which is currently set at 37,35 percent, will be reduced to 37,10 percent next year and to 37,03 percent by 2024.

Healthcare

In terms of the Dutch healthcare system, healthcare staff will receive a one-off corona bonus of 500 euros, but no structural pay increase. Furthermore, 100 million euros will be dedicated to the healthcare budget in 2021 to reduce the regulatory burden.

Housing

There is a 2 billion budget for housing and infrastructure, to aid the availability of new homes and public transport services.

The cabinet is improving access for first-time buyers to the housing market. From 2021, new home buyers aged 18-35 will no longer pay a transfer tax of 2 percent on top of the purchase price of a property, and instead, investors will pay 8 percent instead of the current 2 percent.

Education

The Ministry of Education budget is seeing a 450 million euro increase because there are more students than forecast. 32 million euros are designated to combatting the shortages of teachers. There is a 500 million euro budget for making sure that pupils will be able to catch up after the missed lessons during the coronavirus school closures.

Climate

500 billion euros are going towards measures to reduce nitrogen-related pollution until 2030.

In the Climate Agreement (Klimaatakkoord), it has been agreed that industrial companies will be encouraged to invest in ways to reduce CO2. If companies emit CO2 at levels over the limit, they will pay a CO2 tax. The more efficient the company becomes, the less tax it will pay. Companies that don’t carry out the details of the agreement will risk a levy of 125 euros per tonne of excess CO2 emitted, a levy that has been devised by PBL. The full details are not yet published.

Miscellaneous

Additionally, 800 million will be allocated for local authorities to counteract the impact of COVID-19 on local governments, and to ensure "corona-proof" elections in March 2021. 500 million euros have been set aside for combatting coronavirus in vulnerable countries. 300 million euros are dedicated to prisons, while 150 million is allocated to fighting against organised crime and drug trafficking.

The Netherlands in 2021

The year 2020 has been a challenging one, to say the least. In response, the year 2021 shows some optimism. But nobody can predict whether it will be an easier year than in 2020 or not. Only time will tell.