Tax plan 2023

Tax plan 2023

As many of you will know, the Senate approved the Tax Plan 2023 on December 20, 2022. This means that the law will take effect after the King has approved it and the law has also been published. In anticipation of the King's approval and the publication of the law, the Ministry of Finance provides an overview of the main changes in taxes as of 2023. Below we list some of them that might apply to you.

Payroll and income tax

Box 1

• The basic income tax rate gets lower in 2023 (first bracket in Box 1 goes from 37.07% to 36.93%);
• The rate for deductions falls to 36.93% in 2023 (was 40% in 2022). These include the mortgage interest deduction, the entrepreneur deduction and the personal deduction;
• The averaging scheme for people with highly variable income in box 1 will expire January 1, 2023; the last period over which averaging can be done is 2022 through 2024;
  Accrual of the retirement reserve is no longer allowed as of 2023;
• Increase in the free allowance in the work expense scheme. For 2023, the percentage over the first €400,000 of the fiscal wage bill will be 3% instead of 1.7% that applied in 2022;
• As of January 1, 2023, the maximum untaxed travel allowance will be increased from €0.19 to €0.21 per kilometer.

Box 2

• The efficiency margin in the customary pay rule will be abolished as of 2023. Until 2022, the pay could be set at 75% of the pay from the most comparable employment. By abolishing the efficiency margin, wages should no longer be set at 75% but at 100%.
• Excessive borrowing from the own company is restricted. To the extent that loans from the own company exceed €700,000 (excluding the owner-occupied home debt) on 31-12-2023, Box 2 income tax must be paid.

Box 3

• The tax-free capital in Box 3 will be increased to €57,000 per person (tax partners €114,000);
• The tax rate on lump-sum returns in Box 3 will be increased to 32%;
• For private individuals who rent out homes, the vacant value ratio no longer applies if the annual rent to WOZ value exceeds 5%. For a property with a WOZ value of € 500,000, this means that the property must be included in box 3 for € 500,000 (in 2022, with a return between 5-6%, this would still have been € 365,000). In addition, the vacant value ratios are significantly increased compared to previous years, which means that as of 2023, real estate in private hands will really be taxed a lot heavier than before.

Corporate tax

• Whereas in 2022, 15% corporate income tax was paid on the first € 395,000 and 25.8% was levied on the amount above that, the situation will be much bleaker in 2023. On the first €200,000, 19% corporate income tax will be paid and on anything above that, the percentage levied will remain 25.8%.

Other

• From January 1, 2023, the amount that can be donated tax-free for a private home will be reduced to €28,947. In 2024, the entire exemption will expire.