Impact on Desi Expats of Prinsjesdag 2025

Desi Expats & Dutch Taxes: What Prinsjesdag Means for Your Wallet

Prinsjesdag, the traditional unveiling of the Dutch budget, always brings a flurry of changes, and this year is no exception. While some proposals aim for broader economic stability, several key adjustments will hit Desi expats living and working in the Netherlands particularly hard. From increased travel costs to shifts in your savings and even your electric car, here’s a breakdown of what you need to know to navigate these new financial waters.

Flying Home Just Got Pricier: The New Flight Tax

For many Desi expats, regular trips back to India are a cherished part of life. Unfortunately, the new variable flight tax is set to make those journeys more expensive. Previously, there was a flat rate per passenger, but now, the tax will be based on the distance of your flight.

• The Impact: Since India is a long-haul destination, flights to Mumbai, Delhi, or Bengaluru will incur a significantly higher flight tax. This means your annual trips home, or visits from family, will likely see a noticeable increase in cost. It’s crucial to factor this into your travel budget for the coming year.

Box 3: A Double Whammy for Couples and Savers

The changes to Box 3 tax on wealth, impacting your savings and investments, are particularly stringent this year and could affect Desi expat couples more than others.

• Reduced Tax-Free Allowance: The tax-free allowance for Box 3 is being reduced from €57,684 to €51,396 per person. This means that for a couple, the combined tax-free allowance drops from €115,368 to €102,792. Many couples who previously fell under the threshold might now find themselves liable for Box 3 tax.

• Higher Deemed Returns: The "fictive" return on investments, which the tax is based on (not your actual returns), is being increased from 5.88% to 7.78%. If you have savings in India or other investments abroad that are declared in Box 3, this higher deemed return could significantly inflate your tax bill, even if your actual investment growth is lower. This is especially relevant if your assets are primarily in bank accounts earning lower interest rates.

Driving Your Tesla: Increased Road Tax on Electric Cars

Many expats in the Netherlands opt for electric vehicles, and Teslas are a popular choice, often seen as a greener and more modern way to get around. However, the government's plan to phase out tax exemptions for zero-emission cars earlier than initially planned will impact your annual costs.

• The Impact: While zero-emission cars will still receive a greater tax reduction on motor vehicle tax (MRB) until 2030, the rate of exemption is decreasing. This means that the full weight-based road tax will eventually apply to your electric vehicle, which is often heavier than comparable fossil fuel cars. For your Tesla, this will translate to a higher annual road tax payment in the coming years, gradually eroding the cost advantage of electric vehicles. It's something to budget for if you own or plan to purchase an EV.

Income Tax: A Small Relief, But Keep an Eye on Inflation

While the first income tax bracket sees a small reduction in its tax rate and a slight increase in its threshold, the overall impact on purchasing power is subtle.

• The Impact: Given current inflation rates, the fact that income tax brackets are not fully adjusted for inflation means that your real purchasing power might still feel a squeeze. For many Desi expats, who are often in higher income brackets, the benefits of these minor adjustments might be minimal, particularly when combined with other rising costs.

Navigating the Changes: Your Next Steps

These proposed tax changes are currently undergoing parliamentary debate. While many are expected to be implemented on January 1, 2026, some may be adjusted. It's crucial for Desi expats to:

1. Review Your Finances: Assess how these changes will specifically impact your household income, savings, investments (especially those declared in Box 3), and travel plans.

2. Consult a Tax Advisor: Given the complexities, especially concerning international assets and specific expat situations, seeking advice from a tax professional specializing in expat taxes is highly recommended. They can help you understand the precise implications and explore any potential optimization strategies.

3. Stay Informed: Keep an eye on this blog for updates, as and when the final decisions from the Dutch government regarding these tax proposals.

While the Netherlands remains an attractive place to live and work, staying proactive and informed about these tax adjustments will be key to managing your finances effectively as a Desi expat.