The Dutch government launched its Budget for 2024 which includes measures to tackle tax avoidance schemes and measures to restore purchasing power as well as the minimum wage and investments in educational opportunities.

The government has undertaken pursuant to its coalition agreement to tackle tax avoidance arrangements and to make tax relief schemes that have received a negative evaluation less generous or abolish them. The government accordingly intends to maintain the business succession scheme (BOR) and the deferral scheme for shareholders passing on a substantial interest in a business (DSR ab), but in amended form, since these schemes prevent the continuity of a business from being jeopardised by a gift and inheritance tax liability upon transfer. The government is adopting a total of six measures to make these schemes more robust and simpler going forward.

In the 2024 Budget , the government also announced the minimum wage will be raised by 10% in 2024, an earlier and larger increase than planned. The state pension (AOW) and work-related benefits will rise in parallel.

On the purchasing power front, the government said that to ensure people retain a greater share of their earnings from work, the tax burden on labour will be lowered on a structural basis. This will also help people on middle incomes. An additional €17.2 billion has been earmarked for 2024 for this purpose, €5 billion of which will be available on a structural basis. The measures will be funded in part by steps taken by the government to strike a better balance between tax on labour and tax on wealth.

SME profit exemption will also be reduced from 14% to 12.7%. The exemption makes the income tax burden for self-employed business taxpayers lower than that of employees. The lowering of the exemption will narrow the gap in the income tax treatment of employees and business taxpayers. The main effect will be that business taxpayers with higher incomes will pay tax on a larger share of their profit or income. 

The government also wants to prevent people on low incomes from getting into difficulties. It is therefore making €2 billion available on a structural basis to support them. One way to achieve this through the tax system is by increasing the employment tax credit by €115.

In addition, the halving of the young disabled person’s tax credit will be cancelled and the phasing out of the double general tax credit for people receiving benefit under the Work and Social Assistance Act will be frozen in 2024. These measures will ensure than those receiving around the minimum income are left with more per month after tax.

The government has also decided not to fully adjust the thresholds for the top rate of income tax and the second and third income tax bands for retired persons in line with inflation but by 3.55%. Consequently, people on higher incomes will pay slightly more income tax. Nevertheless, their purchasing power will still increase next year. The €1.6 billion raised by this measure will pay for the compensation for people on lower incomes.

The government is also increasing the tax-free travel-to-work allowance from €0.21 to €0.23 per kilometre and making it easier for employers to provide public transport season tickets to their employees.

Looking ahead, for the coming years the government is reserving substantial amounts for education and equal opportunities (€2.8 billion), housing and infrastructure (€7.5 billion), the future of rural areas (€24 billion), climate change (€35 billion) and defence (€5 billion).

Earlier this year, the Dutch coalition government collapsed over a disagreement over asylum policies.