Dutch insurance premium tax increase to 9.7% in 2011

29 November 2010 - update to earlier announcement on Netherlands IPT increase

The Dutch coalition government has proposed an increase in insurance premium tax.  The Netherlands IPT rate will rise from 7.5% to 9.7% from 1st March 2011 until 1 January 2015.  It will then reduce to 9.5%.  This temporary difference between the 9.7% and 9.5% rates is to compensate the government for the concession of moving the implementation date from 1st January 2011 to 1st March 2011.

premium tax rises around europe

This measure is being put forward to help combat the rising state deficit in the current economic crisis.  The Dutch IPT rate last increased from 7% to 7.5% in 2008.  This means it has increased by over a third in two years.  The new rate will bring the Netherlands into the same range as the average European rate of 9%.  The UK is increasing its IPT rate from 5% to 6% in January 2011.

It has been introduced as part of a package of measures to fund a corporate tax reduction - which will fall to 25% in 2011.  This switch from business taxes (e.g. payroll and corporate tax) to consumption taxes (e.g. VAT and IPT) is part of a global trend to encourage job-creating businesses to remain in-country and avoid employment losses to low tax regimes.

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