Dutch tax hike to 37.8% to take place in two tranches starting from next year

The planned tax hike in the Netherlands to 37.8% will now take place over two phases, as the measure was officially laid out in the country’s budget today, 17 September.

The Dutch budget revealed the tax rate in the market will first rise to 34.2% next year, from its current level of 30.5%.

Then, in 2026, the tax will be upped again to 37.8%, to make the rate one of the highest in Europe.

The measure forms part of the new right-wing coalition government’s first budget since agreeing to a power-sharing deal earlier this year.

The 7.3 percentage point increase is expected to boost returns to state coffers by €202m per year from 2026, with 2025 anticipated to see tax income increase by €102m.

The tax hike has already claimed one exit from the market, with Flutter pulling its tombola brand from the Netherlands, effective from 1 October.

The operator cited increased taxes and stricter marketing regulations as core reasons behind its decision.

A spokesperson for tombola said: “Tombola can confirm that it is to cease operations in the Netherlands effective from 1 October 2024.

“Despite making significant marketing investment over the last three years of activity, we have been unable to achieve a level of meaningful market share, which is a core objective of Flutter’s brand strategy in all markets in which it operates.”

The Dutch coalition government was formed through an agreement between the nationalist Party for Freedom, the People’s Party for Freedom and Democracy, the New Social Contract and the Farmer-Citizen Movement.

The quartet was pulled together after months of negotiations and installed Dick Schoof as prime minister.

Following the ceremonial speech from King Willem-Alexander, Dutch tax affairs minister Folkert Idsinga presented his plans in the House of Representatives.

Alongside confirming the gambling tax hikes, a reduction in income tax for the middle income bracket was also confirmed, as well as a slashing of energy tax on natural gas.

Idsinga said: “With this tax plan, we are starting to fulfil a number of important commitments which this government has made.

“We are supporting working people on middle incomes and various vulnerable groups, ensuring the Netherlands remains attractive to businesses and taking a number of tax measures that will help keep public finances healthy. I am also committed to the continual improvement of our tax system.”

The Netherlands Online Gambling Association (NOGA) said the phased introduction of the tax hike showed the government was aware of the risks, but ultimately the measure will drive black-market growth.

The body has also called for the government to meet with itself and other trade bodies to thrash out concerns and reach conclusions.

NOGA said: “All facts and figures indicate that the tax increase will lead to a further erosion of the regulated supply. Tax revenues will therefore decrease.

“At the same time, an increase in illegal and therefore riskier gambling can be expected. This is at the expense of the general policy objectives of the Dutch gambling policy, which are precisely aimed at consumer protection and the prevention of fraud, crime and gambling addiction.

“If this is abandoned, social costs will increase and therefore mean additional financial setbacks.”

EGR has contacted a host of leading operators in the market to gauge their response to the Dutch budget.

Image credit: Martijn Beekman/Government of the Netherlands