Prince’s Day (Prinsjesdag) 2024: What will change? And what stands out?

reading time: 12 minutes

The Dutch government’s plans for 2025

Prinsjesdag 2024 is the first ever with an extra-parliamentary cabinet. Does that mean that things are different than usual? Will bold and significant decisions be made, or will we continue along the lines of the four Rutte cabinets? We read the plans and will highlight the most notable points from Prinsjesdag 2024. We’ll also provide our commentary.

The government’s plans for the Netherlands were already revealed in the Regeerprogramma published on Friday, September 13. Themes include living standards and purchasing power, housing, and the business climate. As expected from the four governing parties, asylum-seekers and migration, agriculture and fisheries, good governance, a strong rule of law, and security are also high on the agenda.

This article will focus mainly on what Prinsjesdag 2024 means for home buyers and ‘the ordinary Dutch citizen, including expats, of course.’ But we also point out sharp edges, nuances, and seemingly small details that do impact some.

You can visualize the differences with the profiles below.

Happy Harry

Happy Harry

  • Goes to De Efteling four times a year
  • Camps on vacation, comfortably in his own tent
  • Drives a gasoline car
  • Cooks with natural gas
  • Doesn’t generate his own electricity
  • Pays traffic fines after one reminder
Sad Sonja

Sad Sonja

  • Goes to the theater four times a year
  • Camps on vacation, but on a glamping
  • Drives an electric car
  • Cooks electrically
  • Has a few solar panels on her roof
  • Pays traffic fines immediately or after a second reminder

Housing Market and Mortgages

  • Nothing will change about the mortgage interest deduction and the imputed rental value (eigenwoningforfait)
  • The transfer tax for ‘investors’ will be adjusted from 10.4% to 8%, but this will not happen until 2026. For 2025, the transfer tax for investors will remain 10.4%
  • The exemption from transfer tax for people buying a house and who have not used the exemption before (often mistakenly called the startersvrijstelling or first-time buyer exemption) will increase from € 510,000 to € 525,000
  • There are grand plans for housing construction. Every year, 100,000 homes must be built. € 5 billion will be made available over the next five years, and an additional € 2.5 billion for infrastructure
  • On top of the goal of 100,000 homes, the cabinet has also set a target to build 290,000 homes specifically for senior citizens by 2030
  • Appealing a too-high WOZ valuation will become less attractive as the reimbursement for legal costs will be reduced

Food for Thought

In the area of taxation, simplification for owner-occupied homes is highly desired. Correctly administering the fiscal aspects of a mortgage is challenging for citizens and the Belastingdienst. At the same time, having some peace for a while is nice. Much of the legislation in recent years has been aimed at repairing the undesirable effects of complex tax rules. The system is still far from perfect, but it’s still workable in most cases with good information and proper administration.

The plans to build more homes are good news for anyone looking for a house. However, the execution is quite complex. More money for buyers or builders often leads to higher prices, not more homes. By taking more control and designating large-scale construction sites, the government can provide developers and municipalities with more clarity about where exactly homes can be built and under what conditions. If we successfully create the desired 290,000 homes for senior citizens, this could ensure that people start to move through the housing ladder, and the annual target of 100,000 homes would almost be met for three years. However, persuading seniors to move to these new homes is not as simple as it sounds, as research by Petra de Jong shows.

We welcome any policy that encourages more efficient use of homes. Changes to the law that make it easier to rent out a room will hopefully also lead to mortgage lenders allowing room rentals in their terms. In the Netherlands, we have 2.1 rooms available per person. If we could use a large portion of all the vacant rooms in the country, suddenly, there would be living space available for many people. In any case, a large part of the housing ambitions must come from smarter use of existing living space.

In the Regeerprogramma, the plan to establish a Council of Homeseekers was proposed to give those seeking a place to settle a stronger voice in national housing policy. This plan is no longer mentioned in the Miljoenennota and Belastingplan 2025. Once the Council is established, we will monitor developments in this area and inform you through one of our newsletters.

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Taxes and Income

Income Tax

Want an overview of the proposed tax rates for 2025 compared to 2024? PwC has neatly summarized everything in a tax factsheet. The most important changes include a new tax bracket, a lower general tax credit, the 30% rule remaining (kind of), and lower taxes for business owners.

  • One of the most significant changes announced was the introduction of an extra bracket for the lower incomes. The old rate for incomes up to about €76,000 was 36.97%. For incomes up to €38,441, the tax will be lowered to 35.82%. This is a reduction of 1.15 percentage points. For someone who fully benefits from this reduction, with an income of €38,441, this means paying €442 less in taxes
  • How will this be financed? By lowering the maximum general tax credit (algemene heffingskorting) by €294. Someone who receives the maximum general tax credit will, therefore, not gain €442 but only €148 per year
  • The tax advantage for expats, the 30% ruling, was supposed to be reduced according to the Belastingplan 2024. This has been reversed. With a few minor changes, the expat scheme remains as it was. The name 30% ruling probably has to change, as the tax-free portion of the income will no longer be 30% but 27% starting in 2027
  • The tax on dividends that entrepreneurs pay to themselves (Box 2) will decrease from 33% to 31% for dividends above €67,804. The lower rate for dividend pay-outs up to €67,804 remains at 24.5%
  • For everyone with assets over €57,684, the tax on income from assets remains at 36%. This can be seen as a disappointment since the Hoofdlijnenakkoord stated that this rate would be reduced to 34%
  • The general tax credit will, from 2025, be based on the total income from all three tax boxes. As a result, the government will pay out less to citizens
  • The maximum labor tax credit (arbeidskorting) will be increased by €67
  • For single earners who fall below the social assistance threshold in certain situations, a targeted increase in the general tax credit is expected in 2028. Until then, the Participatiewet will be amended so that municipalities can offer a solution for these approximately 65,000 households

VAT and Other Tax Measures

  • The reduced VAT rate for short-stay accommodations, culture, art, books, newspapers, and sports facilities will be abolished in 2026. The VAT on these services will rise from 9% to 21%. The reduced rate will still apply to amusement parks, playgrounds, ornamental gardens, circuses, and zoos. Here’s an overview in the table:
Reduced VAT (9%) No reduced VAT (21%)
Amusement park Museum
Zoo Theater
Circus Books and magazines
Cinema Sport and swimming pools
Camping with your own tent Camping with a pre-set-up tent
Hotel
  • Gambling tax: will rise from 30.5% (2024) to 34.2% in 2025 and 37.8% in 2026
  • The energy tax on natural gas will be reduced
  • The net metering scheme for individuals who generate their own electricity will be abolished in 2027
  • The current excise duty discount on fuel remains
  • Electric cars will initially receive less and then no discount on vehicle tax (motorrijtuigenbelasting). In 2025, the discount goes down to 75%; in 2026, it goes down to just 25%; and from 2030, there will be no discount at all. Since electric cars are often heavier due to their batteries, owners of electric cars will pay more vehicle tax than those with comparable gasoline cars

Food for Thought

We had expected more from the new bracket in income tax Box 1. The reduction is very limited and is primarily paid for by the same people through a lower general tax credit. This is a proverbial offering of one of your own cigars. It would be good if, in the coming years, the tax system were further simplified, making allowances and taxes easier to comprehend so that the system is less of a ‘money-go-round,’ where you pay taxes and receive a portion back through various allowances. A good step for 2025 is for the government to pay childcare allowances to childcare centers directly. This will make it easier and less prone to errors for parents.

Unfortunately, the plans do not include the expected reduction in asset taxes. For Box 3, though, the most important thing is that a new, fair system replaces the current one.

For the 30% ruling, the business community has been heard. The planned reduction in tax breaks for expats coming to work for a Dutch company has been reversed. This keeps the Netherlands attractive for expats, not only because of the culture and good food but also fiscally.

The Raad van State is transparent about the VAT increases for arts and culture. This will certainly not simplify the VAT system (see the camping example in the table above). Whether it will generate the revenue the cabinet expects is highly questionable. Think of schoolbooks becoming more expensive, leading to other societal costs. Also, for example, homelessness shelters lead to more VAT income, but these shelters are government-funded. The Raad van State advises further research into the social side effects, especially concerning freedom of speech and information. Ultimately, this point is a topic for debate in the Tweede Kamer (the Dutch House of Representatives). Whether these plans will become law in 2026 is highly uncertain. Whether amusement parks such as De Efteling and the Dolfinarium should benefit from a reduced VAT rate while books or museums don’t is a political choice that can be disagreed with.

Social Security and Entrepreneurs

Social Security

  • The deductible (eigen risico) for healthcare costs will be frozen. In 2027, the deductible will be halved to €165. For additional transportation costs incurred by people with a severe illness or disability, a fixed deduction of €925 will be introduced in the income tax
  • The rent allowance (huurtoeslag) will be simplified by distinguishing between two types of households instead of four. The personal contribution will be reduced by € 11.58 per month, and some families with relatively high rent can expect more rent allowance
  • Schools with relatively many children from low-income households can provide free meals, as € 135 million will be made available for this
  • The age limit of 27 years for first-degree relatives for benefit partners (toeslagpartners) will be abolished. It will no longer matter if a benefit recipient lives with a child younger- or older than 27 years old
  • In 2025, € 24 million will be made available for debt relief, and an additional € 51 million for the years after that
  • Upon the first reminder, a fine from the Central Judicial Collection Agency (CJIB) will not be immediately increased with administrative costs. Forgetting to pay will be less costly
  • The application period for rent and healthcare allowances (huurtoeslag and zorgtoeslag) for year X will be extended to the end of year X+1. This reduces the risk of being too late and missing out on the allowance

Entrepreneurs

  • The MKB-winstvrijstelling will decrease from 13.31% in 2024 to 12.7% in 2025
  • The top rate for dividend distributions will drop from 33% to 31%
  • The conditions for the Bedrijfsopvolgingsregeling (BOR) will be adjusted
  • The deduction for company donations (corporate tax) will be abolished

Food for Thought

The bar was set high when the cabinet wrote in the Regeerprogramma (page 14, translation by the author): “The cabinet wants to reform social security, allowances, and income tax. We are starting a reform agenda with three goals. Income support must provide certainty and be easy to understand. And working more must pay off. The marginal tax burden must decrease because we need everyone in the labor market. A significant reduction in the marginal tax burden is impossible without reforming the income and tax domain.”

Significant reforms of the tax and benefits system take time and support. Therefore, the entire system was not expected to be overturned in 2025. Some relatively minor changes have been implemented immediately though: school lunches, more extended deadlines for applying for allowances, and the government executing slightly less strict collection procedures for issues that people sometimes simply forget. The term ‘doenvermogen’ is increasingly appearing in government documents, and rightly so. Doenvermogen refers to the ability to take action and persevere, even in the face of setbacks. If citizens don’t understand the system, are tempted to give up, and don’t trust the government, they sometimes miss out on benefits and help from the municipality. The government can ensure that more income support reaches the right people and families by simplifying the system.

We hope that, in the medium term, good government policy will eliminate many people’s fear of ‘the blue envelope’. On the issue of debt problems, we are happy to see more budget and clear short-term policies in the plans. A first step towards a government people can trust appears to have been taken, but much work remains.

Most important sources

Reports

For those who appreciate an ultra-long-read, the cabinet will be working with these reports: