16 September 2025 Netherlands budget proposals; key legislative developments for 2026
The Dutch government published its budget proposals for 2026 on 16 September 2025. This year's parliamentary proceedings of the proposals are expected to be different from other years because of upcoming elections. These elections for the Dutch House of Representatives will be held on 29 October 2025, and therefore the voting on Tax Plan 2026 is expected to take place after the new Dutch House of Representatives has been installed. Thereafter, the Dutch Senate will review the proposals. Final legislation is expected to be enacted in December 2025. Tax Plan 2026 introduces minimal changes in an international direct tax context and continues to pursue a stable and predictable course in relation to the Dutch investment climate. The corporate income tax rate, the innovation box rate and withholding tax rates would remain unchanged. Certain legislative changes that were anticipated, including to the liquidation loss regime, anti-dividend stripping provisions and new risk requirements for intragroup financing companies, were not addressed in Tax Plan 2026. Tax Plan 2026 briefly mentions potential new rules regarding the taxation of currency results (in particular regarding participations), but further details remain to be confirmed. The Dutch Lucrative Interest regime aims to qualify income from certain carried interest or equivalent arrangements in a Dutch taxpayer as regular income (Box 1) instead of income from savings and investments (Box 3). Under current law, it is also possible for taxpayers to favorably requalify such income as income from a substantial interest (Box 2) if the Lucrative Interest is owned through an entity and that entity distributes at least 95% of the profits from such Lucrative Interest in the same financial year. Tax Plan 2026 outlines that the current legislative framework allowing for more favorable Box 2 treatment is considered too lenient. In Tax Plan 2026, proposals are included to introduce a multiplier to broaden the tax base in Box 2 for income from an indirectly held Lucrative Interest. As a result, the effective tax burden on such benefits from an indirectly held Lucrative Interest in Box 2, would be increased up to a maximum of 36%, which is equal to the (highest) tax rate on savings and investments in Box 3. In addition, rules are proposed that seek to address certain situations where a transition from Box 3 to Box 2 leads to a tax advantage. It is noted that the taxation from income and investments (Box 3) will be undergoing significant changes in the coming years. Tax Plan 2026 acknowledges that the above changes for Lucrative Interests may be of a temporary nature and may be aligned with the future Box 3 regime. As of 1 January 2025, the definition of the (non-transparent) mutual fund or fund for joint account (FGR) has changed. This new definition has caused practical uncertainty, especially because both Dutch and foreign partnerships may fall under it, and because it refers to terms from the Dutch Financial Supervision Act. The Dutch government is currently investigating a new definition of the FGR due to practical issues identified during a public consultation in Spring 2025. The State Secretary informed Parliament on 12 June 2025 on the results of the public consultation and announced a new consultation to be opened in Fall 2025. Any legislative changes would take effect no earlier than 1 January 2027. According to the tax legislative proposals as presented in Tax plan 2026, fewer entities will likely qualify as FGR under the new definition. This could mean that some funds are subject to Dutch corporate income tax (CIT) only in 2025 and 2026. To avoid this temporary CIT liability, the tax legislative proposals introduce an additional transitional rule that would allow funds to opt out of the FGR classification from 1 January 2025 until the expiry date of the transitional rules. Conditions for applying this additional transitional rule are as follows:
This transitional rule expires on 1 January 2028 but may end earlier if a new FGR definition is introduced in 2027. In summary, funds that were tax-transparent until 1 January 2025 but may now qualify as non-transparent under the current FGR definition have freedom of choice for 2025 and 2026 (and possibly 2027) to be treated as FGR or not for Dutch CIT and personal income tax purposes, regardless of the future new FGR definition. This transitional rule exists alongside the existing rule for redemption funds and also applies to funds that did not have the intention before 2025 to convert to a redemption fund. Lastly, the newly proposed transitional rule only refers to Dutch CIT liability and it is not clear if the transitional rule may also be applied with regard to the FGR qualification in general (e.g., for dividend withholding tax or conditional withholding tax purposes). Effective date: If favorable for taxpayers, this proposal has retroactive effect to reporting years that begin on or after 31 December 2023. If the proposed changes are unfavorable for taxpayers, the effective date will be 31 December 2025. Tax Plan 2026 introduces various technical adjustments to the Minimum Taxation Act 2024 incorporating the Organisation for Economic Co-operation and Development's (OECD) Pillar Two Administrative Guidelines issued in December 2023, June 2024 and January 2025 that have not yet been codified into Dutch tax law. The contents of the proposals are closely aligned with OECD Pillar Two Administrative Guidelines. Tax Plan 2026 proposes to implement the amendment of the EU Directive on Administrative Cooperation (also known as DAC9) in Dutch law. As such, MNEs would only need to submit a single top-up tax information return for all EU jurisdictions in a single EU Member State. This return would then be included in the existing automatic exchange of information framework among the relevant EU Member States. For certain non-EU Member States, the Multiple Competent Authority Agreement would continue to arrange the exchange of information.
Document ID: 2025-1869 | ||||||
