Tax Plan 2025 Developments

A great many motions and amendments to the Tax Plan 2025 Package were tabled and adopted. The following amendments are relevant for payroll tax.

Increase in the tax-free budget in the work-related costs scheme. This amendment proposes raising the percentage in the first band of the tax-free budget from 1.92% to 2% from 1 January 2025. It was also proposed that the percentage in the first band of the tax-free budget should be raised from 2% to 2.16% from 1 January 2027. The explanatory notes to the amendment state the following:

“By increasing the tax-free budget in the Work-Related Costs Scheme (WKR) small and medium-sized employers (SMEs) can more easily offer a healthy lunch, sports subscription or home office allowance, for example. The proposer would like to see an increase in the first band of the work-related costs scheme, up to a wage bill of €400,000. In real terms this leads to a benefit for employers of around €960 per year, which will accrue mainly to SMEs.

It is proposed to reduce the green investment tax credit and the green investment exemption in Box 3 to cover this. The proposer considers this to be in line with the government’s stated aim to reduce the number of tax schemes.”

• Starting from calendar years 2025 and 2026 the maximum contribution base for determining the "annual margin" (pension shortfall) and the capping limit on pensionable salary will no longer be indexed.
• A technical omission has been fixed - retroactively to 1 July 2023 - concerning the tax calculation rules on nett pensions.
• The budget for funding granted under the Promotion of Research and Development Act (WBSO) will be substantially increased. The tax deduction for start-ups will be increased to 50%. The rate in the first band will be raised to 36%. The first tax band will be increased from €350,000 to €380,000.

Also good to know: no amendment or motion was adopted on the changes to the 30% facility. The proposed change in the Memorandum of Amendment has therefore been passed by the House of Representatives. What these changes entail can be found in our previous newsletter. 

The House of Representatives also adopted several motions. The Van Eike Motion is relevant for payroll tax. This motion calls on the government to further develop the policy option around a favourable valuation (for tax purposes) of stock options and other investments where ‘moderate taxation’ leads to a fair and reasonable rate that is internationally competitive. The House of Representatives further holds that the condition of being ‘in the employment of’ should be brought into line with what is specified in schemes in other European countries. The government was further called upon to devise a scheme specifically for start-ups and scale-ups that would enable the employees of these companies to qualify earlier for the tax benefits of holding a substantial interest. The House of Representatives would like to be informed of the above by 1 July 2025. 

Now that the Tax Plan has been adopted by the House of Representatives, it has passed to the Senate for consideration. The Senate’s schedule for this is as follows: