Cabinet Encourages Dividend Uptake
THE HAGUE, 15/10/13 - The cabinet is luring large shareholder-directors to pay out more than 4.5 billion euros extra in dividends from their private companies (BVs). To this end, it is temporarily lowering the tax rate.
The rate in the so-called Box 2 in the tax returns system will temporarily come down by three points from 25 to 22 percent. In 2007, this was also done on a one-off basis. Based on this experience, the government now estimates that some 4.6 billion euros will be taken up.
Of that dividend, 1 billion euros will flow to the Treasury. The remaining 3.6 billion euros could provide a spending impulse. These incomes form a crucial building-block for the budget accord concluded last Friday between the coalition parties plus centre-left D66 and small Christian parties ChristenUnie and SGP.
Against the one-off tax break for large shareholder-directors (DGAs), is a permanent increase in taxes from 2015. From this year, many DGAs will have to give themselves a higher salary, yielding the Treasury 150 million euros in extra wage taxes.
Currently, DGAs have to pay themselves a salary of at least 43,000 euros, and more if the so-called customary salary (what someone in employment would get for the work) is higher. In the latter case, a discount of 30 percent does currently still apply, but this discount is to come down.
The Van Dijkhuizen advisory committee already said last July that cutting this 30 percent discount could raise 1 billion euros. The cabinet is going much less far with the 150 million, indicating a reduction in the discount by a few percentage points.
The reduction of the rate in box 2 from 25 to 22 percent was actually also an idea of this commission. Van Dijkhuizen also advised that this measure should be permanent. At the beginning of next year, the cabinet will release its reactions to the commission’s proposals.