Today, the government reached a budget agreement, setting a multi-year path to meet the European expenditure rule by 2029. This plan involves 60% spending cuts and 40% new revenue streams.
A projected €9.2 billion is earmarked for 2029, increasing to €10 billion by 2030. This funding will come from salary indexation adjustments, targeted VAT hikes, eco-taxation, and contributions from those with “the broadest shoulders”, alongside social initiatives.
Tax measures include:
- Personal income tax reform: a reduction in taxation initially set for 2029 will partially take effect in 2028.
- VAT and indirect taxes: instead of a general VAT increase, targeted adjustments will apply.
- Rates remain at 6%, 12%, and 21%, but some goods and services will move from 6% to 12%, including hotel stays, sports subscriptions, entertainment (excluding culture), and takeaway services. Pesticides will face a 21% rate.
- Excises: increases on residential gas, heating oil, gasoline, and diesel will indirectly raise VAT, while electricity excises will see a smaller reduction
- VAT rate on non-alcoholic beverages in the horeca sector decreases from 21% to 12%.
- Stricter rules for management companies:
- The withholding tax rate in the VVPRbis and liquidation regimes will rise from 15% to 18%.
- Expanded income definition: movable income will now factor into eligibility for social premiums/allocations.
- Securities account tax: this will double from 0.15% to 0.30%.
- A (new) bank tax.
- An insurance tax.
- Increased tax on short flights from €5 to €10 in 2027, with further increments in 2028 and 2029.
- A €2 levy on small parcels from non-EU countries.
- Anti-fraud measures: establishment of a national financial prosecutor’s office.
Social measures include:
- Wage indexation: no general index jump. Full indexation remains for salaries up to €4,000 gross. For salaries above €4,000, the excess will be indexed by a nominal amount in 2026 and 2028, reverting to the regular system in 2027 and post-2028. Employers will remit half of the savings from limited indexation above €4,000 to the state.
- Indexation freeze: applies to members of Parliament and ministers until the end of the legislature.
- Healthcare funding: an additional €300 million allocation without altering the growth norm.
- Reintegration: 100,000 long-term sick individuals will be reintegrated into work.
- Establishment of a comprehensive register of social benefits.
This negotiation has paved the way for finalising previously discussed measures, including tax on capital gains on shares, labour market flexibility, and pension reform.
