On Wednesday, March 5, 2025, the Ministry of Finance launched the internet consultation on two possible alternatives to increase the tax burden on carried interest for Private Equity managers earlier than originally planned. This consultation was initially scheduled for the spring of 2025 but has now already commenced.
Background and Rationale
On Thursday, February 13, 2025, State Secretary Van Oostenbruggen (Finance) submitted a research report on the lucrative interest scheme to the House of Representatives. This study, conducted in response to a parliamentary motion from April 2024, examines two possible alternatives to increase the tax burden on carried interest for Private Equity managers:
- Fully classifying carried interest as employment income (Box 1), with payroll tax withholding applicable in cases of employment.
- Maintaining taxation in Box 2 but applying a multiplier to increase the effective tax rate.
The current scheme still allows carried interest to be taxed under the Box 2 rate via a personal holding, provided that at least 95% of the benefits are distributed to the individual. For now, this pass-through scheme remains in place. According to the State Secretary, this arrangement provides important advantages, such as strong international competitiveness and manageable implementation.
Responding to the Consultation
Stakeholders can submit their views on both alternatives through the official consultation page of the Ministry of Finance:
Internet Consultation Lucrative Interest Scheme (submit feedback)
Feedback can be submitted until Wednesday, April 2, 2025.
Impact and Next Steps
Any changes will not take effect before the introduction of the new Box 3 system, which is expected to be implemented in early 2026. We will closely monitor developments and keep you informed of any changes.
If you have any questions about this topic or its potential impact on your situation, please feel free to contact us.