Tax Plan 2013 amended to include measures of Fall Agreement

Publication date 11 October 2012

On October 5, 2012, Lower House members Harbers and Plasterk submitted an amendment to the Tax Plan 2013 to include measures from the Partial Budget Agreement 2013, also referred to as the Fall Agreement, agreed on by the VVD and the PvdA on October 1, 2012. The amendment provides for the following measures:
·                    non-implementation of the vitality savings plan;
·                    an increase in the insurance premium tax rate;
·                    introduction of a work bonus.

Also, the Explanatory Notes to the amendment state that the deferral of payment for compliant businesses included in the Tax Plan 2013 will be further relaxed.

Non-implementation of the vitality savings plan
As part of the Tax Plan 2012, the vitality savings plan was to be introduced in 2013, so that employees and businesses subject to personal income tax could receive tax relief for savings to cover situations involving a temporary decline in income. It has been proposed not to introduce the vitality savings plan, in order to provide financial cover for the Fall agreement. This also means that the transitional right to a tax-neutral transfer of the special leave plan to the vitality savings plan will be cancelled.

Increase in the insurance premium tax rate
On March 1, 2013, the insurance premium tax rate will be increased from 9.7% to 21%. This will bring it in line with the general VAT rate.

Introduction work bonus
One of the measures in the Fall Agreement is the introduction of a new personal income tax credit, i.e. the work bonus (not to be confused with the bonus for employees 62 years or older which will be abolished as of January 1, 2013). The work bonus applies to individuals whose employment income is 90-175% of the minimum wage, including a vacation allowance, and who, at the beginning of the calendar year, have reached the age of 60, but have not yet reached the age of 64.

In practice this means that in 2013 the work bonus will amount to 57.763% of the employment income insofar as it exceeds EUR 17,139. The maximum work bonus will be EUR 1,100, for employment income of EUR 19,043, i.e. the minimum wage. To the extent that the employment income exceeds EUR 22,852 (120% of the minimum wage), the work bonus will gradually decrease to nil for employment income amounting to 175% of the minimum wage.

Further relaxation of deferral of payment for compliant businesses
In the Tax Plan 2013, it was announced that the policy on the deferral of payment for compliant businesses will be relaxed. In the Explanatory Notes to this amendment, it was announced that this policy will be further relaxed and will apply to businesses with outstanding tax assessments up to EUR 20,000, instead of EUR 12,000. The deferral of payment will be given for a maximum period of four months.