Mitarbeiter sonstige

Tax Expenditures Country Report: The Netherlands

van Opstal, Rocus
Mitarbeiter sonstige (2024)

Bonn: German Institute of Development and Sustainability (IDOS) & Council on Economic Policies (CEP)

DOI: https://doi.org/10.23661/cr1.2024
Open access

Tax expenditures (TEs) in the Netherlands represent a significant portion of government spending, amounting to 15% of GDP in 2022. These provisions include deviations from the standard tax base, rates, and special credits across various taxes, such as Personal Income Tax (PIT), Corporate Income Tax (CIT), Value Added Tax (VAT), and others. Transparency: The country’s TE report is published every year in the Budget Memorandum. It contains extensive data on more than 100 TE provisions, with information on revenue forgone, results from evaluations and policy measures. Complex landscape: The definition of TEs and their classification remain ambiguous, leading to challenges in assessment and reform. Evaluation challenges: The Netherlands have an evaluation framework where on average every 5 years a TE provision is evaluated. This framework is published every year in the Budget Memorandum. Some evaluations of TE provisions suffer from data limitations, vague objectives, and a lack of conclusive findings, hindering effective policymaking. Fiscal sustainability: With TE provisions playing a significant role in government spending, reform efforts are crucial for achieving greater fiscal sustainability and economic development. Policy recommendations: Caution is required when introducing new TEs or revising existing ones. Evaluations should prioritise quality over quantity. Additional recommendations emphasize the need to clarify objectives, improve monitoring and evaluation processes, and address implementation complexity.