Budget Day plans: the 10 most
important points for SMEs

In his speech from the throne, King Willem-Alexander announced a slight increase of purchasing power for all groups. While last year this was largely at the expense of SMEs, this group of entrepreneurs will be spared this year. Furthermore, there was a promise to reduce and simplify many complex rules and procedures. However, we see little of this reflected in the 2025 Budget Day plans. What stands out is the introduction of a lower tax bracket in Box 1, the VAT increase from 1 January 2026 on culture, hotels, and books, among other things, and the adjustment of the 30% expat ruling to a 27% ruling. Below, we briefly outline the ten most important fiscal proposals and changes for you as an entrepreneur in the real economy.

1. Reduction of the second bracket rate of Box 2
2. Abolition of the reduced VAT rate for art, culture, sports, and hotel stays as of 1 January 2026
3. Reduction of transfer tax for non-owner-occupied homes
4. Business succession scheme (BOR)
5. Reversal of the reduction in the 30% expat ruling
6. Vehicle tax reduction for zero-emission cars
7. Elimination of charitable donation deduction in corporate income tax
8. Introduction of a third income tax bracket
9. Box 3 rate will not be lowered
10. Changes to the earnings stripping measure

1. Reduction of the second bracket rate of Box 2

Since 1 January 2024, the uniform rate of Box 2 has been replaced by two rates. For dividends received up to €67,000 in 2024, a rate of 24.5% applies. This rate will remain the same in 2025, but will then apply to dividends up to €67,804. In 2024, the second bracket rate was changed at the last moment from the originally proposed 31% to 33%. This change will be reversed as of 2025, with a second bracket rate of 31% proposed.

Tip! Tax partners benefit twice from the lower rate of the first bracket, meaning that a dividend distribution of €134,000 in 2024 will be taxed at the lower rate of 24.5%. In 2025, tax partners can benefit from the 24.5% rate on dividend distributions up to €135,608.

Please note! From 2025, dividend distributions will also affect the reduction of the general tax credit. The general tax credit will generally decrease or may even be reduced to zero due to dividend distributions. Additionally, a dividend distribution, even in 2024, will impact the excessive borrowing scheme (also known as the dga-tax) and the amount of assets in Box 3. Consult with your advisor to determine the most beneficial dividend distribution for you in 2024.

2. Abolition of the reduced VAT rate for art, culture, sports, and hotel stays as of 1 January 2026

The lower VAT rate of 9% for culture, media, accommodation (hotels, holiday homes, and caravans), books, and sports will be abolished from 1 January 2026. The general VAT rate of 21% will then apply.

Tip! There are a few exceptions: cinemas, campsites, and day recreation will continue to be subject to the reduced VAT rate.

Please note! The adjustment of the VAT rate depends on the time when the service is provided. If you purchase a ticket for a theatre performance in 2025 for a show taking place in 2026, the general rate of 21% will apply.

3. Reduction of transfer tax for non-owner-occupied homes

The general transfer tax rate of 10.4% will be reduced to 8% for non-owner-occupied homes from 1 January 2026. This rate reduction does not apply to commercial properties. The transfer tax rate for owner-occupied homes remains at 2%. First-time buyers under 35 years old will be eligible for a one-time exemption.

Please note! This reduction is not yet included in a concrete legislative proposal but will be included in a later proposal.

4. Business succession scheme (BOR)

The purpose of the Business Succession Scheme (BOR) and the deferral scheme (DSR) is to prevent the continuity of the business from being jeopardized by the tax burden during real business successions. With fiscal incentives, you can pass the business on to the next generation. The BOR and DSR play an important role in the transfer of family businesses, but beware of the changes adopted at the end of 2023 and the additional tightening that has been announced.

The government proposes to shorten the mandatory continuation period from five to three years as of 1 January 2025. If this proposal is adopted, it means that for acquisitions occurring before 1 January 2025, a continuation period of five years will still apply, while for acquisitions from 1 January 2025, a continuation period of three years will apply.

As of 1 January 2026, the following adjustments are proposed:

• Limiting the BOR and DSR for shares to ordinary shares with a minimum interest of 5%. Options and profit-sharing certificates will no longer qualify for the BOR and DSR for shares.
• Simplification of restructurings during the holding and continuation period.
• A longer holding period for donors and heirs who started the business more than 2 years after reaching state pension age.
• Addressing unintended use of double BOR.

Please note! Since 1 January 2024, property made available to third parties (including rented property) no longer qualifies as a business asset. As of this date, it is no longer possible to donate or inherit such property using the BOR.

5. Reversal of the reduction in the 30% expat ruling

Employees who come to the Netherlands and meet the criteria can benefit from the 30% ruling, which allows them to receive up to 30% of their salary tax-free. The 2024 Budget Day plan had announced a reduction in steps to 10% (the so-called ’30-20-10′ rule). This reduction is largely being reversed.

From 1 January 2027, a fixed percentage of 27% will be introduced. For 2025 and 2026, the 30% rate will apply to all employees who meet the criteria.

The salary threshold will increase from €46,107 to €50,436 (2024). For incoming employees under 30 with a master’s degree, the threshold will rise from €35,048 to €38,338 (2024 figures).

Please note! For employees who applied the 30% ruling before 2024, this percentage will remain in effect throughout the entire period.

6. Vehicle tax reduction for zero-emission cars

Currently, users of zero-emission vehicles (fully electric or hydrogen-powered) do not pay vehicle tax. It was previously announced that, from 1 January 2025, a quarter rate will apply, and the tax reduction will be abolished from 1 January 2026. As zero-emission vehicles have heavier batteries, they will also be subject to higher taxes. To ensure that sales of zero-emission cars do not decline, a 25% vehicle tax reduction will apply from 2026.

7. Elimination of charitable donation deduction in corporate income tax

As of 1 January 2025, the charitable donation deduction for corporations will be abolished. This means that, from this date, donations from your corporation can no longer be deducted. Donations from your corporation will be considered a dividend payment to you personally and will be taxed in Box 2 of income tax.

Please note! Although the charitable donation deduction will disappear from the Dutch corporate income tax, it will remain unchanged in income tax.

Please note! If you support charities through sponsorship or advertising, these costs are not considered donations but business expenses. These costs remain deductible from profits like any other business expenses.

8. Introduction of a third income tax bracket

As of 1 January 2025, a new, lower first bracket in Box 1 will be introduced, providing targeted tax relief for middle-income earners. The rate in this first bracket will drop from 36.97% (2024) to 35.82% (2025), applying to income up to €38.441. The rate for the second bracket will be 37.48%, applying to income up to €76,817. The threshold for the third (and highest) bracket will be €1,298 higher than in 2024, starting at €76,817. The top rate in Box 1 remains 49.5%.

Please note! The reduction in the Box 1 rate also means that deductions in Box 1, such as mortgage interest relief and the SME exemption, will be deducted at the lower rate of 35.82%.

9. Box 3 rate will not be lowered

The Box 3 rate will remain at 36% next year. Despite expectations that the Box 3 rate would be reduced to alleviate the tax burden on savers and investors, the rate will not change.

Please note! In addition to the measures in the 2025 Budget Day Plan, the government has decided to provide additional legal redress for Box 3. The government has chosen to allow a broad group to qualify for this redress. To make use of this, taxpayers must complete the “actual return” (opgaaf werkelijk rendement) form.

10. Changes to the earnings stripping measure

The earnings stripping measure limits the general interest deduction and applies to all taxpayers regarding corporate income tax. This means you can deduct less from the difference between interest expenses and interest income from loans when determining profits. As of 2025, you will no longer be able to deduct the balance if it exceeds the higher of 25% (20% in 2024) of the (adjusted) profit or the threshold of €1 million.

As of 1 January 2025, the €1 million threshold will not apply to real estate entities that rent out real estate to third parties. This means real estate entities can deduct a maximum of 25% of their (adjusted) profit in interest.

Please note! This scheme does not apply to real estate rented out to a related entity or a related individual.