Dutch corporate income tax rate increase for FY 2022 and onwards (status: not substantively enacted)

It is proposed to increase the headline corporate income tax rate from 25% to 25.8% for FY 2022 and onwards. This will have an impact on the measurement of the existing deferred tax assets and liabilities that are expected to reverse in FY 2022 and onwards. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period in which the asset is realized or the liability is settled. This implies that all deferred taxes on 31 December 2021 should be measured at 25.8% (instead of 25%).

Backward tracing is applicable under Dutch GAAP and IFRS. Therefore, the effects of rate changes are recognized consistently with the underlying transaction or event to which the deferred tax position relates and originated (either through P&L or OCI/Equity). Under IFRS, an exception applies to deferred tax positions that were initially recognized through goodwill in a business combination (PPA). The deferred tax implications resulting from the tax rate changes on these deferred tax positions are recognized in P&L.

The final version of the Dutch 2022 Tax Plan is expected to be (substantively) enacted in December 2021. The proposal is expected to enter into effect on 1 January 2022. This proposal, when (substantively) enacted, has an impact on the 2021 financial statements.