Tax plan 2020: 7. (wealthy) private individuals

Burden relief citizens

The government wants to introduce a reduction in the burden on citizens. The Bill Tax Plan 2020 contains various measures that will reduce income tax and make (more) work even more rewarding. These include the accelerated introduction of the two-disc system. The introduction, which was initially planned for 2021, will already be realised in 2020, with a basic rate of 37.35% and a top rate of 49.5% for 2020. There will also be an additional increase in the labour discount and the general tax credit. The increase of the general tax credit is positive for lower incomes.

New income tax rates

For taxpayers who have not yet reached the state pension age at the beginning of 2020, in principle two tranches can be expected in terms of effect.

Box 1-tariff 2020	Taxable income over (€)	but below (€)	Tariff 2020 (%)
Disc low tariff	–	68.507	37,35%
Disc high tariff	68.507	–	49,5%

These percentages therefore include national insurance premiums. A different rate structure applies to those for whom other national insurance premiums apply.

Changed tax credits

Only the changes in tax credits as proposed (or mentioned) in (the Explanatory Memorandum of) the Tax Plan 2020 or mentioned in the memo are included. In principle, lower ceilings apply to those entitled to state pension.

Tax credits	2019 (€)	2020 (€)
General tax credit maximum (< AOW-age)	2.477	2.711
Labour discount max.	3.399	3.595
Income-dependent combination discount max.	2.835	2.881
Young disabled discount	737	749

Transitional right balance annuities

Under old transitional law (2001), taxation of old annuity payments only takes place after the payments exceed the non-deductible deposit. This scheme would end on 1 January 2021, whereby a settlement obligation arose at the transition of the policy from box 1 to box 3. Tax would have to be paid in one go on the policy value minus the non-deductible contribution. It has been proposed to continue the scheme after 1 January 2021 without a settlement obligation. This also applies to certain foreign pensions.

Inheritance tax

No tax interest will be calculated if an inheritance tax return is filed or a request for a provisional assessment is made before the first day of the ninth month after a death, and the assessment is imposed in accordance with the return or request. It has been proposed to also apply this arrangement in situations where the tax return period does not commence on the day of death, for example if there is uncertainty about the person of the heir due to pregnancy. The declaration or request for a provisional assessment must then have been submitted within the declaration period that applies in the situation in question.