Netherlands VAT increase in 2012
27 April 2012
The Dutch VAT rate is set to increase from 19% to 21% on 1 October 2012.
Over the past few months, there have been intensive discussions between the minority coalition government parties on various austerity measures. The aim is to bring the 2012 deficit to below 3% of GDP - one of the key requirements of the Euro currency membership pact.
Whilst there had been some agreement with the minority liberal and conservative government parties, the right wing Freedom Party withdrew its support based on the impact on voters. Following a break down last weekend in talks, and the subsequent break up of the government, fresh elections have been called in September.
In the meantime, various political parties forming the caretaker government have agreed this week on some of the budgetary cuts. The most important measure is the 2% Dutch VAT increase. Other proposed measures include raising the retirement age to 66 in 2019 and to 67 by 2024. The driver behind this tax rise and spending cuts package is the desire to retain the Netherlands' AAA credit rating.
The VAT rate on theatre and concert tickets will changed from the standard rate to the reduced rate of 6%.
In 2008, the Netherlands had announced a 1% VAT rise to 20%, but it was pulled as the financial crisis broke.