Kingdom of the Netherlands-Netherlands: Selected Issues


Kingdom of the Netherlands-Netherlands: Selected Issues

Tax Reform in the Netherlands: Moving Closer to Best Practices1

The government has recently floated ideas for a broad tax reform, including measures to decrease the labor tax wedge, eliminate VAT distortions, as well as measures that increase labor force participation and delegate more taxing powers to regional governments. Following intense debates, a more modest income tax cut package of €5 billion has been agreed upon for 2016.

This paper aims to contribute to the discussion by sketching ways in which the taxation equity-efficiency frontier could be shifted outwards in the Netherlands. In a nutshell we argue that significant efficiency gains could be achieved by shifting the tax burden away from labor, and towards consumption and capital—especially housing.

In our view, considerable thought should be given to reforming capital income taxation, which is fragmented, inefficient and has many regressive features. We also highlight the detrimental impact of the tax-benefit system on labor supply—in particular by mothers—and the insufficient and distortionary use of VAT as a revenue-collection mechanism. Finally, the Dutch tax system favors debt over equity financing. The distortion is particularly large in the housing sector where debt building is generously subsidized leading to over-leveraged household balance-sheets. But similar debt-bias is also present in the corporate sector.

Future tax reforms should explore ways to relieve the burden on labor by diversifying the sources of tax revenues. Measures that expand the tax base and increase burden-sharing across tax instruments, that tackle the debt bias in corporate and household financing, that eliminate VAT distortions and increase labor force participation must be encouraged.

This note reviews the main features of the Dutch tax system and sketches the contours of a hypothetical tax reform. While voluntarily high-level, the discussion aims to contribute to the ongoing debate by highlighting the most important gaps with established best practices.

A. Introduction and Stylized Facts

1. In the Netherlands, a very uniform distribution of income contrasts with a rather skewed wealth distribution (ex-pension entitlements). The Dutch economy is hardly distinguishable from other advanced open economies when measured against the usual yardsticks of income per capita, potential growth and inflation. But the combination of very uniform income distribution and very skewed wealth distribution sets it apart. Although typical measures of wealth do not take into account pension-related savings—the most important store of wealth in the Netherlands—this still comes as a surprise given the country’s revealed social preference for equity, and suggests scope to transfer some of the tax burden from labor to capital.

Figure 1.
Figure 1.

The Netherlands: Income and Wealth Distribution

Citation: IMF Staff Country Reports 2016, 046; 10.5089/9781475557695.002.A001

Source: OECD.

2. Labor income taxation is doing the heavy lifting in terms of revenue collection and income redistribution. The comparatively elevated (with respect to European counterparts) labor taxation in the Netherlands features a very progressive labor tax scale and dissuasive marginal tax-and-benefit schemes for low income workers—in particular mothers. At the same time, capital income taxation is one of the lightest in the European union, and indirect taxation—a potentially efficient revenue collection instrument—does not carry its share of the load (see Table 1). By discouraging labor supply, the current tax system shrinks the tax base and overloads taxpayers.2

Table 1.

Structure of Taxation in the Netherlands, European Comparison*

(Percent of GDP)

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Source: Eurostat, Taxation Trends in the European Union, 2014

The ranking reflects relative levels of revenue-to-GDP ratios for each revenue source among the EU-28, with rank 1 being the highest ratio.

B. Improving the Design of Capital Income Taxation

3. A voluminous theoretical research on optimal taxation has reached rather straightforward conclusions (Mirrlees review, 2011, De Mooij, 2007, Jacobs, 2013). A good tax system should be simple, transparent, efficient, and should not introduce arbitrary differentiations across commodities, taxpayers, or forms of economic activity. In achieving a given level of income redistribution (a social choice) the tax system should aim to minimize the distortions on individual consumption and production choices; it should trade a larger tax base for a lower tax rate. The principles are clear, but the implementation often raises a whole set of issues—which are particularly acute when it comes to taxing capital income.

4. An unequivocal theoretical recommendation on the appropriate fiscal treatment of capital income is still lacking. One school of thought argues that capital income is part of a comprehensive income, and should be taxed in the same way as labor income according to the ability-to-pay principle. The major problem with this approach is that taxing savings—especially at a progressive rate—increases the price of future consumption and discourages investment; an important violation of the principle of neutrality of taxation. The distortion is even larger when the tax is levied at the source (corporate tax) as corporate capital is more internationally mobile than personal capital (Sørensen, 2007). This has led to the seemingly logical and opposite conclusion that returns to capital should not be taxed at all. At least normal3 returns should be exempted, suggesting that the optimal taxation design is an expenditure tax that implicitly exempts normal returns to capital but taxes excess returns (Mirrlees, 1971, Atkinson and Stiglitz, 1976, Mirrlees review, 2011). While a priori attractive on efficiency grounds, this policy prescription poses practical (political) challenges along the equity dimension—even if redistribution can theoretically be addressed via labor income taxation. Moreover, exempting capital income shrinks the tax base and for given revenue needs may place an excessive—and potentially inefficient—burden on other forms of taxation.

5. A pragmatic solution to the ongoing theoretical debate: the DIT. The so-called Dual Income Tax system (DIT) put in place by several Nordic countries since the end of the nineties (i.e., Finland, Norway, Sweden) can be seen as a compromise between the comprehensive income and the expenditure tax outlined above. In its purest form, the DIT combines a low, unique and flat tax rate on all capital incomes4, with a higher and progressive tax rate on labor income—for revenue and distributional purposes (Sørensen, 2007, 2010 and Jacobs, 2013). A unique, flat and low tax rate on capital income i) avoids the undesirable progressivity of the taxation of real returns due to the inflation premium, ii) aligns the marginal personal income tax on capital with the corporate income tax, eliminating the scope for tax arbitrage activities and allocational distortions, iii) minimizes the risk of capital flight while broadening the tax base and iv) simplifies tax administration as it allows the tax on interest and dividends to be collected as a withholding tax.5

6. The Achilles heel of the DIT system is that it provides new tax-arbitrage opportunities. Under a pure DIT system, there is strong incentives for some individuals—mainly self-employed and small business owners—to re-label high-taxed labor income activities as low-taxed capital income. One practical solution to this tax-arbitrage issue—pioneered by Norway in 2006—is to levy an additional personal shareholder tax for all capital incomes (both dividends and capital gains) that exceed the normal return to capital (already taxed under the low and flat corporate income tax, CIT). The personal shareholder tax rate is chosen such that the combined tax burden on capital income is close to the highest bracket of labor income tax,6 thereby eliminating the incentive for income shifting (Sørensen, 2010).7 An alternative approach consist in maintaining the pure DIT system (with a low and flat tax rate on all capital incomes), but to explore allocation rules that effectively split income revenues along the labor and capital lines—thereby avoiding income shifting practices. However, the Norwegian experience suggests that splitting rules are prone to be circumvented and difficult to enforce.

7. The Dutch capital income taxation system is still some distance away from best practices. The Netherlands introduced a new regime for capital income taxation as part of a complete tax reform in January 2001. The most significant changes with respect to the old system was i) the introduction of the box scheme for sorting out different sources of personal incomes for taxation purposes, and ii) the introduction of the ‘presumptive’ tax on personal capital income in Box 3, which taxes capital income at 30 percent ‘ex-ante’ on an imputed rate of return on assets of 4 percent; the presumptive capital income tax is therefore equivalent to a 1.2 percent wealth tax.

8. Widely different regimes for different types of capital cohabitate, which creates important distortions. While the new system greatly reduced the tax collection administrative burden, it also introduced a whole range of new issues. First, the Dutch tax system—unlike the DIT system—violates the neutrality principle, potentially introducing large distortions in savings and investment choices. Some capital incomes are taxed at a progressive rate in Box 1, like e.g., the return on equity invested in proprietorship, or the imputed rent on owner occupied houses net of mortgage payment deductions. Others are taxed at proportional rates in Box 2, like e.g., the return on equity invested in closely-held corporations. And the rest is taxed in a regressive fashion8 in Box 3, like e.g., the presumptive return on the value of bank deposits, stocks, bonds and real estate. There is also double-taxation of the returns on corporate equity, which contrasts with the taxation of returns on savings held in pension funds, which are subsidized through the deductibility of pension contributions in Box 1. Second, by imposing an ‘ex ante’ taxation of presumptive returns in Box 3, the Dutch capital income taxation system encourages excessive leverage and risk taking, favors portfolio investment and forgoes the beneficial countercyclical properties of taxing realized returns (dividend and capital gains). Third, the Dutch tax system severely distorts business incentives towards debt financing and away from equity. This is in particular the case for small businesses and self-employed whose income after—interest-payment-deduction is taxed under Box 1 at a progressive rate, and for owner-occupied housing whose (artificially low) imputed rental income is taxed net of mortgage interest payments.

9. The Netherlands subsidize pensions saving through a favorable taxation regime. In the Netherlands, like in many other countries, the accrual of pension wealth—in contrast to other forms of capital—is not subject to capital income taxation, in violation of the principle of neutrality in taxation that suggests that pension funds should be taxed like other forms of savings. Pension savings are also subsidized through the tax treatment of contributions and retirement benefits. Contributions are deducted from taxable labor income and are taxed at a later stage—but at a lower rate—when pension benefits are disbursed. As high-income earners are able to contribute (and deduct) relatively more to pension plans (including 2nd and 3rd pillar) than low-income earners, pension savings are not only subsidized but the scheme has regressive features. The regressive aspect of the system is made worse by the progressivity of labor income taxation as higher income earners are able to deduct at a comparatievely higher rate. To avoid regressive taxation, the tax rate on retirement income should correspond to the one at which the deductions were made on average. Merely capping the tax deductible contributions9 is a very crude way to mitigate the regressive nature of the pension tax scheme, as it introduces additional distortions and arbitrary redistribution. Because pension savings are largely mandatory, decreasing the pension subsidy would not deter savings but boost tax revenues that could be used to further trim the labor tax wedge. The budgetary impact of taxing pension savings as other capital in Box 3 could be considerable as total pension fund assets exceed €1.2 trillion in the Netherlands.10

Personal Income Taxation in the Netherlands

On January 1, 2001, the tax authorities of the Netherlands introduced the new Income Tax Act 2001 (Wet Inkomstenbelasting, 2001) whose main element was a reform of the tax treatment of income from savings and investment at the personal level. The new income tax system groups different types of incomes into separate ‘boxes’ with different tax rates. The table below1 summarizes the system’s main features.

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Corporate profit (net of interest income) is taxed at 25 percent (20 percent for profits up to €); capital income realized through pension savings is not taxed.

General tax credit, income related tax credit, children related tax credit and other deductions apply

Includes wages, salary of proprietors, presumptive wage income of the director-dominant shareholder (at least 5 percent of shares) of a closely-held corporation, social security benefits.

Paid interest is tax-deductable at the marginal tax rate in Box 1. Starting in 2014, the applicable marginal tax rate is decreased by 0.5 pp per year, from 52 percent to 38 percent. An owner-occupied house is considered a consumption good under the Dutch tax system, and thus exempt from capital taxation. An imputed rental income (eigen-woningforfait) is (which amounted to 0.7 percent of the value of the house in 2014) is added to households’ taxable income.

Pensions savings are deductable from taxable income in Box 1, pension benefits are taxed under Box 1 at retirement.

A controlling shareholder holds, either alone or together with his/her partner, at least 5 percent of the shares of a (closely held) corporation.

36.5percent, including social security contributions.

42 percent, including social security contributions.

1/. Based on Cnossen and Bovenberg (2001) and the Dutch Ministry of Finance.

C. Correcting for the Debt Bias

10. The favorable tax treatment of debt over equity—at both the personal and corporate levels—introduces large distortions. Besides creating significant inequities, complexities and economic distortions, high levels of debt to equity present important risks for financial stability and fiscal sustainability (De Mooij, 2012). Basically, two different options are available to mitigate the problem: either eliminating the tax deductibility of interests or introducing a similar deduction for equity. Under the Comprehensive Business Income Tax11 (CBIT) corporate income is taxed before interest. Treating debt and equity financing in a symmetric way also eliminates the need for capital income taxation at the personal level which solves the traditional problem of the double taxation of equity.12 However, because of fears that investment could be affected in the transition towards a system that implies a higher taxation of corporate profits13, international attention has moved towards the alternative—the so-called Allowance for Corporate Equity (ACE).14. The ACE allows firms to deduct an imputed normal return on equity from the CIT as they do with interest on debt.15 The main practical problem with the ACE is that the loss in fiscal revenues has to be compensated with other—possibly distortionary—taxes or by higher statutory tax rates, which may trigger international tax arbitrage behaviors by the most profitable firms. This caveat can be mitigated by introducing the ACE in an incremental way.

11. In the Netherlands, the debt bias is particularly large in the subsidized housing sector, where taxable imputed returns on property are set at an artificially low level while mortgage interests are deductible—at progressive rates—from personal income under Box 1. This is an important distortion as large amounts of savings are detracted from potentially productive investments to further inflate house prices. The subsidy is so large that the overall revenue from capital income taxation at the personal level is negative (see Table 1). Clearly, a more balanced tax treatment of housing-related debt would free up a lot of fiscal resources that could be used to decrease distortionary taxes on labor or other capital income. As residential capital is a very inelastic factor, a housing tax would be efficient.


Households Debt to Gross Disposable Income, 2011


Citation: IMF Staff Country Reports 2016, 046; 10.5089/9781475557695.002.A001

Source: OECD.

12. Some measures have already been taken to reduce mortgage deductibility over time. But more should be done to reduce the debt bias in the housing sector. A higher equity share in housing should help prevent boom-bust cycles with important benefits in terms of financial stability and fiscal sustainability. And there are many ways to achieve this result. The principal of neutrality in taxation suggests that owner-occupied housing should be taxed as capital income, not as personal income—which could be easily accommodated under the current system by shifting home-owner property investment from Box 1 to Box 3. Such a move would eliminate the exorbitant subsisdy attached to owner-occupied housing. Preferably, under a new capital income taxation system (as delineated in precedent paragraphs), imputed rental costs would include a risk premium on top of the benchmark risk free rate, and could take into account depreciation costs (Jacobs et al., 2007). Consistent with a CBIT-like system, mortgage deductibility could be phased out faster than under current agreements. In case of a sharp house price drop, the (large) fiscal revenue windfall from removing the home-owner subsidy could be partially used to help the most vulnerable (under-water) home owners increase home equity. In the long run, a form of housing equity allowance—calibrated in a similar fashion as the ACE for corporates—could be introduced to match the remaining deductions from interests on mortgage, if any.

D. Trimming the Labor Tax Wedge Further

13. The recently announced €5 billion tax cut package is a step in the right direction, as the measures strengthen work incentives with a focus on low incomes and 2nd earners.16 Future measures should continue to be focused on low-income and mothers (both singles and in couple), which are the groups with the largest labor supply elasticity—along the extensive margin—and the highest ‘participation’ tax. (See Figure 2).17 Targeted measures that stimulate work incentives, like e.g., in-work tax credit to low income workers, income dependent tax credit for second earners or for single parents, or income-dependent child benefit, should be favored. Combining in work tax-credit for low income earners with lower across-the-board benefits would exert the largest ‘bang for the buck’ in terms of labor supply as income and substitution effects work in the same direction. However, the impact on income distribution would also be the largest (De Boer et al., 2014). There might also be some scope for a slight reduction in the marginal tax rate on high-earners (above €57,585 per year). Recent simulations (Jacobs, 2013) show that the marginal tax rate on high-earners is set slightly above the revenue-maximizing level. Lower marginal tax rates on high-earners might also disincentivize large investment in tax deductible mortgages which in the past led to sharp increase in households’ debt and associated financial fragility.

Figure 2.
Figure 2.

The Netherlands: Labor Income Tax Burden

Citation: IMF Staff Country Reports 2016, 046; 10.5089/9781475557695.002.A001

Source: OECD.

E. Indirect Taxation: Unifying VAT Rates

14. Economic theory unambiguously suggests that VAT rates should be unified across different goods and services. A unique VAT rate ensures that production and consumption choices remain undistorted (neutrality)—with signficant welfare gains (Bettendorf and Cnossen, 2014)—it eliminates costly tax evasion behaviors and simplifies administrative processes. This consensus stands in stark contrast with the dominant practice. In spite of a voluminous theoretical research that shows that redistribution is more efficiently done via labor income tax, VAT rates are often used for redistribution purposes, with necessities taxed at a reduced rate.

15. Unifying VAT rates in the Netherlands would provide sizeable additional tax revenues that could be used to further reduce more distorting labor income tax. The scope for shifting revenue collection from the highly distorting labor income tax to the more neutral VAT is particularly large in the Netherlands where the burden of indirect taxation is among the lightest in Europe (Table 1). Simple calculations (Table 2) show that the (ex-ante)18 impact of standardizing VAT rates would amount to €8 billion (if only reduced rate items were adjusted).19 Alternatively, extending the tax base to reduced rate items would allow a decline in the standard rate to 12.3 percent—to the extent that the additional revenue is not used to reduce labor taxes.

Table 2.

Composition of VAT Revenues, 2010

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Source: Bettendorf and Cnossen (2014), IMF staff calculations

16. The usual redistribution argument for maintaining differentiated tax rates does not hold in the Netherlands. Bettendorf and Cnossen (2014) show that i) the share of household budget spent on reduced rates items does not differ much across income groups and ii) the VAT burden does not vary much in proportion of income/expenditures. Wealthier households benefit as much as poorer households from the reduced VAT rates: they just consume more of the exempted goods and services, in line with their relatively higher disposable income.

F. Streamlining the Tax-Benefit System

17. The tax-benefit system has become excessively complex and requires stronger screening and monitoring capacity at the Tax and Custom Administration (TCA). The multiplication of taxes and allowances has put the TCA under considerable strain (Algemene Rekenkamer, 2015). This is in particular the case for the regime of allowances, as the TCA is in charge of eligibility assessment and enforcement. A large investment in specialized staff and technology will be necessary to track and organize a tremendous volume of information and avoid abuses and fraud that could eventually lead Dutch tax payers to lose confidence in the tax system. Steps in the right direction have been taken and a pluri-annual IT development plan agreed upon.


Marginal Tax Burden on Labor Income

(1,000 euros)

Citation: IMF Staff Country Reports 2016, 046; 10.5089/9781475557695.002.A001

Source: CPB.

18. The limits and potential costs of the current system of allowances can be epitomized by the generous tax exonerations for self-employed. Initially seen as a way to increase the flexibility of the labor market, the self-employed allowance scheme may have introduced a very large distortion in the labor market with important long to medium-term costs. First, as mentioned above, it is very difficult for the TCA to assess the many features (i.e., allowance for R&D activities, for investment, for hours worked by partners in the family business, deductions for assets depreciation) that give rise to tax allowances and deductions under the self-employed program. As the number of self-employed swells, this situation runs the risk of transforming the self-employed status into a tax avoidance scheme. Second, and even more importantly, the potential long-term costs of the tax-preferred status for self-employed may not be negligible. By favoring self-employed, the current tax system may be creating small business traps (3/4 of self-employed are active in a one person company) with important negative consequences for productivity growth (inefficient labor organization, lack of training on-the-job and actual investment in R&D). Self-employed also typically drop off the usual social security and pension plans, which may pose important risks for individual coverage and the long-term financial stability of these institutions.20

G. Decentralizing Taxing Powers

19. There is ample scope for decentralizing taxing powers in the Netherlands. In 2014, only 10 percent of regional-government revenues were financed by local taxes—a particularly low number in international comparison. By transferring tax raising powers to local authorities, the government could foster greater fiscal commitment and better scrutiny. This would also increase incentives for local governments to spend revenue efficiently. Local recurrent property taxes on owner-occupied houses could be the ideal vehicle to enhance taxing powers at the regional level, while at the same time trimming housing subsidies.

H. Conclusions

20. The tax system in the Netherlands is one of the most equitable in the OECD. But there is ample scope for improvement along the efficiency dimension. First, capital income taxation is fragmented, regressive, distorts allocation towards excessive investment in housing and favors debt finance over equity—at both corporate and personal levels. A more homogeneous capital income tax system along the lines of the Nordic dual income tax (DIT) system would go a long way in correcting the largest distortions. Second, a more symmetric tax treatment of debt and equity would contribute to dampen the amplitude and reduce the frequency of boom-bust cycles, thereby improving financial stability and fiscal sustainability. Introducing an ACE and/or backtracking on the favourable treatment of debt—in particular in the housing sector—should be high on the agenda. Finally, increasing both VAT and capital income tax revenues would help alleviate the burden on labor income taxation and increase labor force participation (hours worked).


  • Algemene Rekenkamer, ‘Letter to the House about Review of the Tax System’, 19 March, 2015.

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Prepared by Jean-Marc Natal (EUR). This paper greatly benefitted from helpful comments by Ruud de Mooij and Arjan Lejour and discussions with Bas Jacobs.


Approximate back-of-the-envelope calculations suggest that taxing pensions as ordinary savings under Box 3 (€14 billion; 1.2 percent wealth tax on about €1.2 trillion pension wealth), removing the tax subsidy on owner-occupied housing (about €6 billion in lost fiscal revenues due to the combination of low imputed return on housing and high deductibility of mortgage interests, see paragraph 11), and unifying VAT at the standard rate (€8 billion) would increase (ex-ante) revenues by roughly 4 percent of GDP.


A rate of return that compensates investors for time preference and expected inflation.


The DIT usually includes a mechanism to avoid the double-taxation of equity.


Note that in practice international treaties signed by Nordic countries forbid levying withholding taxes on interest and dividends paid out to non-residents.


Because it increases the effective tax rate on capital income, this solution seems to defeat one of the stated objectives of the DIT which is to avoid damaging capital flight (see point iii above). However, the relevant tax margin for investment purposes is the CIT. International capital mobility implies that a higher tax on personal capital income will essentially result in lower domestic savings and current account balances, but should not tremendously affect investment if the CIT remains low and constant (Sørensen, 2007).


Note, however, that this solution also introduces a close correspondence between the level of capital and labor income taxes which can be seen as a constraint by the tax authorities.


The effective tax rate on a deposit account with 2 percent return is 60 percent, while the effective tax rate on an equity portfolio with 8 percent return is 15 percent. As equity and other high yielding assets, including real estate, are typically held by wealthier individuals, the presumptive taxation system is regressive. A new law on capital income taxation scheduled for 2017 attempts to mitigate the regressive aspect of the current arrangement by setting the presumptive return as a function of total wealth, divided into three brackets (W<€100,000; €100,000<W<1,000,000; W>1,000,000). While an improvement with respect of the current arrangement, the new system still falls short of taxing realized capital returns.


The tax base for pension deductions is capped at €100,000 in the Netherlands.


A simple back of the envelope calculation would suggest €14 billion (€1,200 x 1.2 percent) to which we could add the current lost revenues from taxing retirement benefits at a reduced rate.


Proposed by the U.S. Treasury in 1992.


Note that introducing a withholding tax on interest in a DIT system is equivalent to the CBIT. CIT = tau*(R–dK–iB) + tau*(iB) = tau*(R–dK), for (R) the net cash flow post labor costs, (d) the depreciation rate, (K) the firm’s capital stock and (iB) the interest paid on net debt.


A priori, the CBIT increases CIT and decreases PIT, while ACE does the opposite. As business capital is more internationally mobile than personal capital, the general preference for ACE is easily understandable. However, one could argue that enlarging the tax base would permit lower tax rates so that the net effect of the CBIT on CIT may not be positive after all. At the end of the day, it all boils down to how other taxes are adjusted and able to pick up the slack when either CBIT or ACE is introduced.


First proposed by the Capital taxes group of the Institute for fiscal studies in 1991.


The ACE also provides a natural hedge against the investment distortion caused by deviations between true economic depreciation and depreciation for tax purposes; if firms write down their assets at an accelerated pace, the current tax saving will be eventually offset by a fall in future rate of return allowances.


The measures are expected to create about 35,000 new jobs, in particular among dual earners households with small children. The €5 billion tax cut package announced on September 15 will be allocated as follows:

  • i) Rise in the personal income tax threshold of the fourth tax bracket (highest earners), from the current €57,585 to €65,000, for which the tax rate will remain at 52 percent (about €1 billion);

  • ii) Reduction in the total personal income tax rate in the second and third bracket between €19,923 and €66,421 per year (about €2.5 billion);

  • iii) Increase in earned income tax credit and childcare subsidies for second earners (about €500 million) and corporate tax incentives for hiring of low-paid workers (about €500 million);

  • iv) Increase in personal tax-free allowance for incomes up to €50,000 per year, alongside a reduction in the number of general tax exemptions (about €500 million).


The participation tax is defined as the sum of increased taxes and lost benefits when labor income is increased by a given amount.


Of course these calculations tend to oversimplify as they assume constant behaviors throughout. A more interesting exercise would look at the growth and unemployment effects of a budget neutral increase in VAT.


If the unique VAT rate was extended to all currently exempted goods and services, the tax revenues would amount to a maximum of €33 billion or 70 percent of total personal income revenues ex-social contributions. Note that this would have to be compatible with the EC directive which legislates what services are to be exempted and therefore set a higher bound.


For a more extensive discussion of the status of self-employed in the Netherlands, please refer to the special issues paper, “Dual Labor Market in the Netherlands—Environment and Policy Implications” by Michelle Hassine.

Kingdom of the Netherlands—Netherlands: Selected Issues
Author: International Monetary Fund. European Dept.