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Database of national-level policy measures

Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure NL-2022-1/2221 Updated – measures in Netherlands

Tax reduction on energy bill and reduction of tax rate on electricity

Gedeeltelijke compensatie stijgende energierekening

Country Netherlands , applies nationwide
Time period Temporary, 01 January 2022 – 31 December 2022
Context War in Ukraine
Type Other initiatives or policies
Category Promoting the economic, labour market and social recovery
– Responses to inflation
Author Amber van der Graaf (Panteia) and Eurofound
Measure added 09 May 2022 (updated 12 September 2022)

Background information

To compensate citizens and businesses for the rising energy prices, the government decided to take various measures to soften the increase of the energy bill for Dutch citizens. This measure concerns an extra tax reduction on the energy bill and on top of that a reduction of the tax rate on electricity in 2022.

Other measures which are part of the set of measures to partly compensate for rising energy costs for households include Extra energy allowance for lower incomes , Reduction in VAT on energy and excise duty on petrol and diesel and More money for households to take energy-saving measures .

Content of measure

The discount consists of:

  • Lower tax on electricity in 2022. This will save an average household over €150 (including VAT).
  • Extra discount on energy taxes in 2022. Households and companies will therefore pay €265 (including VAT) less tax.

In practice, this amount will differ per household. It depends on the energy consumption of the household. This measure thus addresses affordability. The tax credit on the energy bill will be increased by €230 including VAT. The tax rate on electricity (first bracket) will be lowered by 8.4 eurocents including VAT.

While introducing the measure, the government explained that it only has direct influence on the tax part of the energy bill, and that “the sharp increase of the energy bill, due to the rising prices on the gas and electricity market, can therefore only be partially limited by the government.”. The government allocated a total of €2.7 billion for the compensation of households and €0.5 billion for companies.

A household with average energy consumption will receive a discount of over €400 (including VAT) on the energy tax in 2022. On average, a household consumes 1,170 m3 of gas and 2,384 kWh of electricity annually.

Updates

The following updates to this measure have been made after it came into effect.

09 September 2022

The energy discount turns out to be €225 instead of €265 mentioned earlier. This is because after the decision to increase the refund, the government also reduced the VAT on energy from 21% to 9% between 1 July and 31 December 2022. Because the discount is calculated inclusive of VAT, the amount for 2022 is €40 lower.

Use of measure

All citizens eligible, tax reduction is automatically applied.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Applies to all citizens

Actors and funding

Actors Funding
National government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role No involvement No involvement
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • Social partners jointly
  • Main level of involvement: Peak or cross-sectoral level

Involvement

No involvement in designing and implementing the measure, for monitoring see 'views'.

Views and reactions

Social partners, in particular trade union FNV, called on the Government to opt for more specific measures targeted at people with lower incomes, rather than this generic measure. They argued that a generic measure benefits many citizens who do not need it, and is not providing enough support for those in real need.

Sources

Citation

Eurofound (2022), Tax reduction on energy bill and reduction of tax rate on electricity, measure NL-2022-1/2221 (measures in Netherlands), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/NL-2022-1_2221.html

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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.