Planned tax changes, budget cuts & expenditures from coalition agreement

The PVV, VVD, NSC, and BBB coalition have many are planning to reverse many announced tax increases and have announced several tax cuts and increases themselves. They also plan many budget cuts and extra investments. Here is a summary of the budget for their “main lines agreement.”

The tax cuts and investments in the “main lines agreement” will cost the treasury 14.7 billion. Budget cuts will save the treasury 14.7 billion euros. Raising taxes will bring in another 4.6 billion euros in additional income. Long-term it balances out in the government spending 4.7 billion euros less due to this package.

Money coming into the treasury

Things that will cost more

• The cultural sector will no longer fall under the low VAT rate of 9 percent but will have to charge the high VAT rate of 21 percent. That will mean higher prices for theater and museum tickets. Cinemas and amusement parks are excluded and can still charge the low VAT rate.
• All types of holiday accommodations except for campsites must also charge the high VAT rate of 21 percent, so hotel stays will become more expensive.
• The VAT on books, magazines, and newspapers will also increase to 21 percent
• The netting scheme, in which solar panel owners can deduct the energy they add to the grid from the energy they use, will disappear in 2027.
• From 2027, there will be a levy on circular plastic. The levy will generate over 500 million euros in income per year for the treasury, and likely result in many products becoming more expensive.
• Flight tax will become distance-dependent from 2027. According to the coalition parties, longer flights will be taxed more because they emit more greenhouse gasses. So long-haul flights will become more expensive. Until now, climate policy has generally focused on discouraging short flights because they can be easily replaced with more environmentally friendly forms of travel, like the train. The coalition expects this measure will generate 248 million euros per year.
• The AWF premium—the premium employers pay to the unemployment fund—will increase by 0.1 percent from 2026. This concerns the high version of this premium, which mainly applies to flexible workers. The Cabinet expects this to raise 245 million euros.
• The amount of gifts companies can deduct from their profit tax returns will be limited.

General budget cuts and savings

• The subsidy for the social service period will be scrapped
• The coalition plans to cut the number of full-time jobs at government services by 22 percent, bringing it back to the 2018 level. These cuts in civil service should eventually save about 1 billion euros, the parties expect.
• Civil servants will also not receive pay increases in 2026, good for a cut of 600 million euros
• The scrapping of the asylum distribution law will save on the bonuses to municipalities that do their share in sheltering asylum seekers.
• The fewer asylum seekers the parties hope their “strictest asylum policy ever” will achieve will yield 1 billion euros in the long term, the right-wing parties expect. They also think this will save 100 million euros on social assistance
• The planned increase in minimum wage is scrapped
• Municipalities and provinces will receive significantly less from the central government
• The childcare allowance won’t increase along with inflation, as planned
• Less money will go toward development cooperation and other foreign aid, saving 2.5 billion euros structurally
• The coalition will try to contribute less to the EU, eventually saving 1.6 billion euros if they succeed. If they don’t, they’ll raise that money by cutting a bit in all budgets
• Subsidies for generating sustainable energy will be cut by 1 billion euros per year
• Other subsidies, including for encouraging a healthy lifestyle, inclusivity, and participation in society, will all be cut a little bit to save 1 billion euros
• The budget for the NPO - the national public broadcaster - will shrink by 100 million euros per year

Students and education

• According to the parties, its plans for limiting the number of international students will also save money. These plans still need to be worked out but include higher tuition fees and more restrictions on basic study grants for non-EU students.
• The public transport reimbursement for Dutch students abroad will be abolished
• Students who take too long to graduate will face higher tuition - every year of delay will cost these students an extra 3,000 euros
• The subsidies for “broad bridge classes” - for kids who need some extra help so that they can attend secondary education at a different level than their primary school recommendations - will be abolished. And the “School and Environment” subsidy will be limited to the 5 percent of schools with the largest disadvantages. The coalition expects to save 210 million euros per year with these cuts.
• Additional expenditure for higher education and science will be cut.
• The subsidy to recruit more teachers to the Randstad will be scrapped

Healthcare and Social Security

• Public health spending will be cut. The coalition wants to save 300 million euros in the long term
• Additional money to recruit more healthcare staff will be reversed. That will save 130 million euros.
• Budget cuts on healthcare aimed at employees should yield 590 million euros
• Less money will go into digitalizing care in community nursing and care for people with disabilities
• The unemployment benefit will be reformed—unemployed people will be entitled to this benefit for 18 months instead of the current 2 years.
• Large employers will no longer be reimbursed for the transition compensation they have to pay people dismissed due to long-term occupational disability
• The costs allowance for people with disabilities will be scrapped

Money going out of the treasury

Households will get more money from

• More support for middle-income earners through a third income tax bracket. That will cost 2 billion euros
• The parties froze plans to phase out double tax credits - so people receiving benefits won’t be limited in the tax credits their households can claim for now
• 500 million euros per year will go into a fund to help households in need. This plan still needs to be elaborated
• The child budget will increase
• The rent allowance will increase
• The healthcare deductible will be frozen for the next two years and then halved in 2027. That will cost 5 billion euros per year

More money will also go to

• More money for elderly care from 2027
• Farmers will be allowed to use red diesel again, saving them 28 cents per liter of fuel and costing the treasury 141 million euros per year
• Farmers will receive 500 million euros per year to help with nature management
• Students who fell under the loan system will receive compensation for the debts they have accrued. That will cost 1.4 billion euros

Defense and national security

• Defense spending will increase by 2.4 billion per year to adhere to the NATO standard of spending 2 percent of GDP on defense
• Eventually, 200 million euros per year will go toward establishing a constitutional court, introducing a new electoral system, and more money for the judiciary
• 300 million euros per year extra to the police and other security services

Tax cuts and reversed tax increases

• Companies won’t have to pay tax when buying back their own shares. That’ll cost the treasury 800 million euros per year
• A planned tax increase for SMEs is scrapped
• The increase in energy tax for large consumers will be reversed. That will cost the treasury 227 million euros per year in missed income
• The increase in tax on income from (a share in) a company will be reversed. So this box 2 rate will decrease from 33 to 31 percent
• The box 3 tax on savings and investments will be reduced. By how much is not yet clear, but the parties planned to miss out on 100 million euros per year for this.
• The reduction in excise duties on motor fuels will remain in effect next year, costing over 1.5 billion euros
• The energy tax on gas will be reduced for small consumers, by 2.82 cents per cubic meter. That will cost the treasury 357 million euros
• Companies will be allowed to deduct more interest from their profits when filing their corporate tax returns. That will cost the treasury 419 million euros per year