Today, the government reached a budget agreement, setting a multi-year path to meet the European expenditure rule by 2029. This plan involves 60% spending cuts and 40% new revenue streams.
A projected €9.2 billion is earmarked for 2029, increasing to €10 billion by 2030. This funding will come from salary indexation adjustments, targeted VAT hikes, eco-taxation, and contributions from those with “the broadest shoulders”, alongside social initiatives.
Tax measures include:
- Personal income tax reform: a reduction in taxation initially set for 2029 will partially take effect in 2028.
- VAT and indirect taxes: instead of a general VAT increase, targeted adjustments will apply.
- Rates remain at 6%, 12%, and 21%, but some goods and services will move from 6% to 12%, including hotel stays, sports subscriptions, entertainment (excluding culture), and takeaway services. Pesticides will face a 21% rate.
- Excises: increases on residential gas, heating oil, gasoline, and diesel will indirectly raise VAT, while electricity excises will see a smaller reduction
- VAT rate on non-alcoholic beverages in the horeca sector decreases from 21% to 12%.
- Stricter rules for management companies:
- The withholding tax rate in the VVPRbis and liquidation regimes will rise from 15% to 18%.
- Expanded income definition: movable income will now factor into eligibility for social premiums/allocations.
- Securities account tax: this will double from 0.15% to 0.30%.
- A (new) bank tax.
- An insurance tax.
- Increased tax on short flights from €5 to €10 in 2027, with further increments in 2028 and 2029.
- A €2 levy on small parcels from non-EU countries.
- Anti-fraud measures: establishment of a national financial prosecutor’s office.
Social measures include:
- Wage indexation: no general index jump. Full indexation remains for salaries up to €4,000 gross. For salaries above €4,000, the excess will be indexed by a nominal amount in 2026 and 2028, reverting to the regular system in 2027 and post-2028. Employers will remit half of the savings from limited indexation above €4,000 to the state.
- Indexation freeze: applies to members of Parliament and ministers until the end of the legislature.
- Healthcare funding: an additional €300 million allocation without altering the growth norm.
- Reintegration: 100,000 long-term sick individuals will be reintegrated into work.
- Establishment of a comprehensive register of social benefits.
This negotiation has paved the way for finalising previously discussed measures, including tax on capital gains on shares, labour market flexibility, and pension reform.
We’ll keep a close eye on these developments as the measures transition into legislation. For more details or to understand the impact, reach out to your PwC representative.
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