Small business VAT exemption

Do you expect your annual turnover to remain below € 20.000 in the coming years? Then it is possible to apply for the small business VAT exemption (KOR), meaning no VAT needs to be charged on sales invoices. Entrepreneurs who apply for the KOR are exempt from VAT and have fewer administrative obligations. For instance, they usually do not have to file a VAT return. However, the KOR can also be disadvantageous, as for instance, entrepreneurs with the KOR cannot deduct VAT on expenses.

If you have turnover taxable in another EU country for VAT, you may be able to qualify for a similar VAT exemption arrangement in that country. The regulations have been changed as per 1-1-2025 in order to unify the schemes in various countries. An important condition is that the EU-wide annual turnover must remain below the € 100.000 limit. For more information about the regulations, please contact our office.

Tax free scheme

We would like to make you aware of the possibility under the Dutch Wages Tax Act to make a payment on a tax free basis for certain reimbursements which normally would be regarded as taxable income. This year this tax free scheme (‘vrije ruimte’) is maximised at 2% of the total company wages up to € 400.000,– and 1,18% beyond that. If you have not paid any other reimbursements or benefit of any kind to employees including directors which could be regarded as taxable wage, you could still make use of this scheme by paying out a tax free bonus as long as this is usual. A maximum amount of € 2.400 would be regarded as usual.

Tax free-allowances employees

The tax-free travel allowance of € 0,23 remains the same in 2026. Because many people have been working from home since the covid crisis (and this indirectly costs the employee money; more energy consumption, coffee consumption, etc.), a tax-free working from home allowance was introduced. As a result, employers can reimburse a maximum of € 2,40 per day in or part of a day worked in 2025 (€ 2,45 in 2026). The two allowances cannot be paid at the same time; per day you can either opt for payment of the work from home allowance, or payment of the travel allowance.

An employer can provide a tax-free allowance for setting up a home workplace. The employer can reimburse the costs for, for example, an office chair or computer screen via other specific exemptions from the work-related costs scheme.

Tax free scheme

Changes for sole proprietorship /partnership

The self-employed deduction has been phasing out since 2020. From 2023, this is happening in an accelerated fashion. The plan is to gradually reduce the self-employed deduction by € 1.280 a year, to € 900 in 2027. In 2025, the maximum self-employed deduction was € 2.470, in 2026 this will be € 1.200. In 2026 the SME profit exemption will remain unchanged at 12,7%.

Restriction from borrowing from own company

The possibility to borrow from one’s own BV has been restricted as of 2023, with the taking effect of the Excessive Borrowing from Own Company Act (wet excessief lenen). If a shareholder borrows more than € 500.000 from his or her own BV, the excess will be taxed in box 2 (once). The reference date is 31 December. First home equity debts do not count towards the € 500.000 limit if they are covered by a notarial mortgage deed (a mortgage deed is not required for home equity debts existing as of 31 December 2022). In the case of high loans or overdrafts, it is important to anticipate this and consider repayments before the end of the year, or reserve money for the tax settlement. Specific rules also apply in partner situations. Is your debt to the BV higher than € 500.000? Contact our office to discuss the possibilities and consequences.

Tax interest

Since the introduction of the interest regime in 2013, there has been criticism regarding the disproportionate nature of the system. Taxpayers were charged higher interest, particularly when there was a long period between the tax year and the date of the assessment. At the same time, it was rare for interest to be paid on a refund.

In recent years, interest rates used by the Tax Office have increased substantially, up to 10% for corporate income tax, which has led to the system being perceived as excessive and unfair. Tax interest can accumulate significantly and is not always avoidable.

Many appeals against this system have now been designated as a collective appeal procedure. This allows taxpayers to join the ongoing appeal procedure via a single objection, without needing to take separate legal action for each individual case.

Please note: it remains essential to file an appeal within the assessment’s objection period in order to participate in the collective appeal procedure.

Additional levy for non-electric company cars

From 1 January 2027, an additional levy will be introduced for non-electric company cars made available to employees. This levy amounts to 12% of the catalogue value annually. For cars older than 25 years, the taxable base is the market value, unlike the standard private use tax (‘bijtelling’), which switches to market value after 15 years. The levy is payable by the employer.

This levy is in addition to the private use tax for employees and makes it highly unattractive from a tax perspective for employers to provide a non-electric car to their employees. It also applies to hybrid vehicles. Electric cars are exempt from this levy; however, other benefits associated with electric cars are gradually being reduced. For cars made available before 2027, a transitional period applies until September 2030.

Changes box 2

In 2024 a two bracket tax rate was introduced in box 2. This concerns income from substantial interest, such as dividends and capital gains on shareholdings above 5%. The rate in 2026 will remain unaltered at 24,5% for the first € 68.843 and 31% for the amount above that. Since this applies per partner, a total of € 137.686 can be taxed at the low rate in case of fiscal partnership.

Income tax box 2	2025	2026
First bracket up to € 68,843 (2025: € 67,804)	24,5%	24,5%
Second bracket from € 68,843 (2025: €67,804)	31%	31%

Careful dividend planning can help to remain within the lowest tax bracket as much as possible. If you plan to distribute larger dividends in the future, it may be advantageous to bring these distributions forward or to spread them over several years.

Change in corporate tax

The 2025 corporate tax rates will remain the same as for 2024:

Corporate tax 2025	2026
First bracket up to € 200.000	19%
Second bracket from € 200.000	25,8%

Other tax tips and changes

General

Do you expect to pay tax for the 2025 or 2026 tax year? Requesting a provisional assessment in good time, will save you interest. Interest is calculated if the assessment is imposed later than 6 months after the end of the calendar year. The interest is 6.5% currently. To ensure that the assessment for 2025 is imposed in time, we recommend that you apply for it before 1 April 2026. The assessment for the 2025 tax year must be paid at once. There is the possibility of paying the assessment for the tax year 2026 in instalments during the year. Do you have questions about this? We are happy to assist you in applying for a provisional assessment.
If you expect to receive a refund for 2020, an Income Tax return for this year must be submitted before December 31, 2025. In 2025, the 5-year term for submitting this declaration will expire.
If you have not yet used the annual gift exemptions in 2025, you can still do so until 31 December 2025. The general exemption for gifts to your children in 2025 is €6,713 per child. This exemption can, under certain conditions, be increased once to €32,195 or €67,064 if the gift is used for an expensive education. For all other recipients, the exemption is €2,690.

Deductions

If possible, bundle deductible expenses such as medical expenses and donations in one specific year. For example, a deduction is achieved earlier and the threshold is only deducted once from the expenses. For donations, the threshold disappears completely if you commit to donating to a charitable institution for 5 years, which has to be agreed on in writing.
In 2025, deductible items may be taken at a maximum of the lower rate of 37,48% even if your income falls in the highest bracket.

Box 3

As mentioned in the introduction, if you were planning on converting (low-yielding) assets (e.g. shares, crypto, real estate) to bank accounts, this could save a substantial amount of box 3 tax for 2026 if this is done before the end of the year. All other assets apart from bank accounts are taxed at the highest rate, while bank accounts are taxed at a lower rate. Receivables and loaned amounts are also taxed at the highest rate, therefore it would save box 3 tax for 2026 if the amounts are received or paid back into your bank account before the end of the year. This is only applicable if, in due course, you choose for taxation on fictitious box 3 income.
The green investment exemption in box 3 will be scaled back further. From 1 January 2025, the green investments exemption is reduced to € 26.312 (2026: € 26.715). From 1 January 2027, the exemption will be lowered to € 200 and from 1 January 2028 it will be abolished altogether.
If you wish to make use of the Declaration of actual return for the year 2020, we recommend doing so before 31 December 2025, as the possibility lapses after 5 years.
There are no easy tax-saving opportunities for Box 3 properties. Filing an objection against the municipal WOZ assessment is one option, for which careful planning is important, also taking into account the return on other assets. Taking out loans on a Box 3 property is another possibility, particularly if this keeps the equity below the tax-free allowance. Of course, interest will apply on these loans; financing through a private company (BV) may therefore be more advantageous. These options, however, depend on specific circumstances and require professional tax guidance. Foreign properties are exempt from Box 3 taxation in the Netherlands, but they may still be taxable abroad.

Home owners

The general transfer tax/stamp duty rate will be lowered from 10.4% in 2025 to 8% in 2026. This rate is valid for all properties except those to which the reduced rate of 2% or the starter exemption applies. For a first residence property (in which you will live yourself) the rate is 2% under certain conditions.
House buyers between the age of 18 and 35 can benefit from a one-off transfer tax/stamp duty exemption if they meet certain requirements. The limit of this starter exemption (house value limit) will be raised from € 525,000 to € 555,000 in 2026. If the purchase price is between these values, waiting with the house purchase until 2026 could potentially save thousands of euros in transfer tax.