On April 15, the outgoing cabinet presented the Spring Memorandum 2024 to both the House of Representatives and the Senate. Within the scope of this memorandum, various revisions to the budget for this year are presented, along with a look ahead to the budgets of future years. An notable change, for example, is the further reduction of the SME profit exemption. This article provides an overview of some changes that are important for you as an SME entrepreneur.
What does the Spring Memorandum entail?
The “spring memorandum” is released by the government in the spring and contains updates from the government for the rest of the budget year and often also for the coming years. It can also serve as an interim evaluation of the budget previously presented.
Key topics that may be addressed in the spring memorandum include changes in government spending, tax proposals, economic growth forecasts, policy initiatives in various areas such as education, healthcare, social security, infrastructure, and the environment.
In general, the spring memorandum provides an opportunity for parliament and the public to gain insight into the financial plans and priorities of the government, and to encourage debate and discussion on the proposed measures.
Extra expenditures
- The cabinet proposes to make a total of 4.4 billion euros available for military and humanitarian aid to Ukraine for the period 2024-2026.
- The cabinet allocates an additional 0.5 billion euros in 2025 to address the suffering of affected residents in the earthquake area.
- For the “Toeslagen” restoration operation, the cabinet also allocates more funds, 0.4 billion euros in 2024 and 0.9 billion euros in 2025.
- The Central Agency for the Reception of Asylum Seekers (COA) will receive an additional 375 million euros in 2024 and 700 million euros in 2025 to open new locations for (crisis) emergency shelter or to keep existing locations open longer.
- The outgoing cabinet has decided to grant a 40% discount on motor vehicle tax for emission-free passenger cars from 2026, decreasing to 35% in 2029 and 30% in 2030. This is how the caretaker cabinet wants to further stimulate the purchase of emission-free cars in the coming years. Maintaining the net metering scheme for solar panels. Abolishing the energy tax for heavy industry.
Covering the additional expenses and disappointing revenues
The extra expenses are covered by windfalls in various budgets. The disappointing revenues are covered by the following measures:
- Abolition of purchase subsidy for second-hand electric cars: the purchase subsidy for second-hand electric passenger cars (SEPP) will not be extended from 2025 onwards.
- Adjustment of the BPM table for plug-in hybrid cars; The PHEV will be included in the regular BPM table from 2025 onwards. Bpm is the private motor vehicle and motorcycle taks.
- Further reduction of the SME profit exemption to 12.03% from 2025 onwards. The SME profit exemption was already scheduled to be reduced to 12.7% from 2025 onwards.
- Increase in energy tax: the rate in the 3rd, 4th, and 5th brackets of the energy tax on natural gas will be increased by 22.4% as of 2025 and an additional 2.7% as of 2030.
- Shift of the budget from the “VAMIL” (accelerated depreciation environmental investments) to the “MIA” (environmental investment deduction) because apparently there is more demand for the MIA than the VAMIL;
- Reduction of the top tax rate income tax threshold (thus entering the top rate of 49.5%) earlier.
This article “spring memorandum” highlights a number of fiscal proposals from the Spring Memorandum 2024. In August, the new cabinet will assess whether it is necessary to further adjust the budget and coverage.
