Dutch taxes: Changes for 2025

With new tax changes being implemented in the Netherlands from January 1, it's important to make sure that you are on top of all the new rules and how they might affect you and your finances. Here, Viviënne Wormsbecher from Blue Umbrella explains the key things you need to know.

As we head toward 2025, it's a good idea to look ahead to upcoming tax changes and how they may affect your wallet. In this article, we give you the key changes for the upcoming year.

Income Tax  

The Dutch government is changing the income tax system in Box 1 significantly (income from work and home ownership). Starting January 1, 2025, there will be three tax brackets instead of two:

• 35,82 percent for income up to 38.441 euros
• 37,48 percent for income between 38.441 euros and 76.817 euros
• 49,50 percent for income above 76.817 euros

This new structure aims to make work more rewarding, especially for middle-income earners. For AOW (state pension) recipients, a lower rate of 17,92 percent applies to the first income tax bracket, providing some relief for retirees.  

The general tax credit (algemene heffingskorting) will now be based on total income across all boxes, rather than just Box 1 income. Its maximum amount will decrease to 3.068 euros in 2025, but it will only start to reduce at income levels equivalent to the statutory minimum wage, benefiting lower-income groups.

Business tax

Several modifications will impact entrepreneurs and companies: The self-employed deduction (zelfstandigenaftrek) continues its gradual reduction, decreasing to 2.470 euros in 2025. This is part of a longer-term plan to lower it to 900 euros by 2027. The SME profit exemption (MKB-winstvrijstelling) will be reduced to 12,7 percent in 2025, affecting small and medium-sized businesses.

Freelancers

For freelancers, it is important that as of January 1, 2025, the Dutch tax office intends to check more strictly for false self-employment or schijnzelfstandigheid. This should prevent companies from avoiding their employers' responsibilities and obligations. Freelancers would be wise to check whether they meet all the conditions, such as having multiple employers.

VAT changes

There are some major VAT changes coming in 2025 that every entrepreneur should be aware of. The scope of VAT will be extended from digital services to virtual services provided over the internet. This change will affect a wide range of online services, including coaching sessions, consultations, live streaming events, paid webcam interactions and various artistic, sports, cultural, scientific or educational services provided remotely.

Digital services such as online newspapers or pre-recorded webinars were already covered by these rules, but the new rules now apply to interactive, real-time virtual sessions. From January 1, 2025, companies providing such services will have to charge VAT based on the location of the customer, rather than the location of the service provider.

This shift in VAT rules underscores the importance for companies to stay informed and adjust their billing practices accordingly to comply with the new tax rules across the EU.

Savings and investments

Following a Supreme Court ruling, taxpayers in Box 3 (savings and investments) can now prove if their actual returns are lower than the forfeit returns calculated by the tax authorities. This change could lead to reduced tax burdens for some investors. Other notable changes include:

• The work-related expense scheme (WKR) will expand, with the tax-free allowance percentage for the first 400.000 euros of the wage bill increasing from 1,92 percent to 2 percent.
• The expat tax regime (30 percent ruling) maintains its cap at the WNT norm (246.000 euros in 2025), with plans to reduce the maximum percentage from 30 percent to 27 percent in 2027.
• The rules for deducting healthcare-related travel expenses will change, introducing a fixed rate of 0,23 euro per kilometre for medical travel by car.
• The maximum deduction for periodic gifts to charities will increase to 1,5 euros million per calendar year.

These tax changes reflect the Dutch government's efforts to balance economic growth, social equity, and environmental sustainability.

Interested in how any of these changes affect you and your personal situation? Contact Blue Umbrella, who will be happy to help you with your questions on any tax-related issues.