The new ‘Deep Tech Fund’ (DTF) will make €250 million available, primarily for investments in innovative and complex technologies. Funding often proves to be a problem for the development of such technologies.
The DTF will focus on start-ups and scale-ups, or in other words young companies with growth ambitions, often in the technical sector. Companies of this kind tend to devote themselves to the development of new technologies.
A problem often encountered by young technology companies is that they have not yet proven themselves and therefore represent a relatively high risk. This can make finding investors difficult. If such companies are successful, however, they are also highly profitable.
DTF will operate as a co-investor and as an independent part of Invest-NL. Invest-NL is a national agency engaged in the development and financing of companies and projects that will accelerate the transition to a circular economy. Invest-NL has an investment capacity of €2.5 billion.
DTF’s fund management and Investment Committee are independent and provide binding decisions on investment projects.
A new investment fund aimed specifically at knowledge-intensive companies is being launched. The objective is to provide a boost to the technological knowledge of the Netherlands, thereby improving the country’s competitive position.
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In certain cases, you as an employer must apply for a work permit for employees who do not originate from the European Economic Area (EEA) or Switzerland. The EEA consists of the EU Member States, Norway, Iceland and Liechtenstein. As of 1 January 2022, a work permit can be granted for a maximum of three years, depending on the conditions.
A work permit with a full labour market check can be granted for a maximum of two years instead of one year. A full labour market check implies that the UWV first checks, according to a certain methodology, whether suitable personnel can be found within the EEA and/or Switzerland; this is called priority labour supply. The available vacancy must also be reported to the UWV at least five weeks before submitting the application. In addition, you must be able to demonstrate that you have made sufficient efforts to fill the vacancy with priority labour supply.
The UWV will not conduct a full labour market check if there are extraordinary circumstances that require a fast filling of the vacancy and that could not be foreseen or influenced.
An exception is made for certain activities, for which no full labour market test takes place. This applies to the exercise of a spiritual, religious or ideological function. An exception is also made for international trade contacts, education, training, voluntary work, international exchange and other cultural contacts, and for foreign nationals with a valid work permit.
The new WAV has also added a number of conditions for obtaining a work permit. For example, you as the employer must pay the wages stated on the work permit to the employee through a bank account. These wages relate to work for a maximum of one month. This way, the Dutch Labour Inspection can better monitor the payment of wages.
The application for a work permit can also be rejected if no economic activities take place in your organisation. If you have recently started your business, you will have to be able to demonstrate that your business has started. The UWV will then agree with you on the period within which you must demonstrate this. Furthermore, if you apply for a work permit of longer than one year, you are obliged to offer the foreign employee training in the Dutch language.
The Foreign Nationals Employment Act (WAV) has been amended. As of 1 January 2022, a work permit can be granted for a maximum of three years. Previously, this was a maximum of one year. In addition, the conditions for obtaining a work permit have been expanded.
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Please note:The government’s plans still have to be approved by the Lower and Upper House.
If you were planning to buy an electric car in the near future and register it in your company’s name, do so this year. From next year the addition to taxable income is increasing from 12% to 16% and this lower rate will apply only on the first € 35,000 of the list price instead of € 40,000, as is currently the case. By purchasing the car in 2021, you will benefit from the lower addition to taxable income for five years. This year you will also benefit from a 13.5% environmental investment deduction up to a maximum list price of € 40,000.
The corporation tax rate is 15% on profits up to € 245,000. Next year this rate will apply up to a figure of € 395,000. Above this level profits will be taxed at a rate of 25%. If you own several companies, you can offset profits and losses between them by setting up a tax entity. This advantage comes with a downside, however: you can only benefit from the lower tax band once. You should therefore review your tax entity and terminate it in good time if you wish to do so. If you want to terminate it with effect from 2022, the Tax and Customs Administration must receive your request before 1 January 2022.
In connection with the coronavirus pandemic, exemptions from gift tax have been increased by €1,000 for this year only. The amount of the exemption now stands at € 6,604 for gifts to children and at € 3,244 for gifts to grandchildren and other third parties. Take advantage of this additional exemption!
This year, in connection with the coronavirus pandemic, the fixed budget under the work-related expenses scheme amounts to 3% up to a wage bill of € 400,000 and 1.18% on the excess amount. The rate that applies up to a wage bill of € 400,000 is being reduced to 1.7% in 2022. If possible, you should therefore make use of the fixed budget this year, as any unused portion cannot be carried forward to 2022.
There are some tax credits that your partner can only receive to a limited extent if he/she has insufficient income him/herself. This applies to the general tax credit, the employed person’s tax credit and the income-dependent combination tax credit. Anyone born before 1 January 1963 is not affected by the restricted payment of the general tax credit, but is subject to the restrictions relating to the employed person’s tax credit and income-dependent combination tax credit. You can avoid losing these tax credits by allocating income to your partner in box 2, such as dividends, or having your partner pay tax on assets in box 3.
If you invest more than € 2,400 this year, you may be entitled to the small-scale investment tax credit (KIA). This is an additional deduction from your profits. The amount of the deduction decreases the more you invest. You should therefore consider postponing investments at the end of this year if you would then receive a higher KIA in 2021 and 2022.
If you make environmentally friendly investments, you may be entitled to the environmental investment deduction (MIA). The percentages for this deduction are being increased in 2022, so postponing your investments until 2022 would be an attractive option. However, it is not yet clear which assets will be eligible for the MIA in 2022 and what percentage will apply to the asset in question. This will be published at the end of 2021 in a new Environmental List (Milieulijst). Keep an eye on this at the end of this year and decide then whether you would be better off making your environmentally friendly investment this year or next year. Make the necessary preparations now with your supplier.
Your private assets are taxed in box 3. The reference date for this is 1 January of the year in question. You should therefore make sure that you do not withdraw too much cash from your sole tradership or company before 1 January. That’s because, depending on the level of your assets, in 2022 you will pay up to 1.71% in tax on the cash withdrawn. You can also pay cash from your private assets into your business before 1 January.
If you want to gift a sum to your children or a third party in connection with the purchase of their own home or the repayment of their mortgage, this year the gift is untaxed up to an amount of € 105,302. If you make the gift this year, this will reduce your assets in box 3 by the same amount, which could save you up to around € 1,800 in tax.
Healthcare costs are still deductible. This year they can still be deducted at a maximum rate of 43%, which will fall to a maximum rate of 40% next year. A threshold applies, however, which means that only healthcare costs above this threshold are deductible. If you have paid a substantial sum to your dentist this year, for example, and also want to buy a new hearing aid, consider doing so this year as well. You will probably then exceed the threshold by a larger amount, which will save you tax.
Which tax-related measures can you still benefit from this year as an entrepreneur? How can you respond smartly now to changes that will apply from 2022? Here are ten practical tips.
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From 1 January 2022 you can grant your employees an untaxed homeworking allowance of up to € 2 per day. This amount is based on a calculation by Nibud (National Institute for Family Finance Information) of the average additional costs incurred, e.g. for coffee and heating, for each day worked at home. Under certain conditions it was already possible to grant an untaxed allowance for setting up a home workstation. An untaxed travel allowance of up to € 0.19 per kilometre for commuting also remains in place for days when the employee travels to the office.
Please note: The travel allowance of € 0.19 may not be awarded to employees on days when they are working from home.
That means that if you pay a homeworking and travel allowance, you must always determine the allowance on a per-day basis. You can also opt to follow a practical scheme that has been approved by the legislator.
Paying employees in the form of share options is becoming more attractive. This will allow start-ups and scale-ups to attract talent more easily, for example, and boost new business development in the Netherlands.
At present, tax is paid on share options when the option right received is converted into shares. The downside of levying tax at this moment is that employees (and the employer) pay tax immediately, even though they are not always able to sell the shares yet or do not always have sufficient funds to pay the tax.
From 1 January 2022 employees can decide for themselves when the tax is levied:
In 2022 it will remain possible for directors/major shareholders (DGAs) of innovative start-ups to apply a reduction to their customary salary. This will help to improve the liquidity position of these DGAs. Originally, this scheme was due to expire on 1 January 2022, but this end date has been pushed back one year.
For a number of years now the government has been encouraging companies to invest in innovative, environmentally friendly assets by means of the environmental investment deduction (MIA). The MIA allows companies to deduct a percentage of the investment costs from their taxable profit. That means they pay less income or corporation tax.
From 1 January 2022 the percentages are being increased, entitling companies to a higher deduction. Making environmentally friendly investments is therefore becoming more attractive. Three percentages currently apply to the MIA: 13.5%, 27% and 36%. From 1 January 2022 these will be raised to 27%, 36% and 45%.
Tip: Consider postponing your environmentally friendly investments until 2022!
Which percentage applies to an environmentally friendly asset is indicated on the Environmental List (Milieulijst). The Netherlands Enterprise Agency (RVO) updates the Environmental List at the end of each year. In combination with the Vamil (arbitrary depreciation of environmental investments) scheme your net tax benefit can rise to over 14% of the investment amount.
The government wants to continue to encourage the purchase of zero-emission cars, even though this is costing it more than expected. It is therefore making the following proposal:
The tax plans include two proposals relating to the income-dependent combination tax credit (IACK):
Income tax rates will remain the same as proposed in last year’s tax plan. They will therefore be as follows in 2022:
Income tax rate/national insurance contributions for 2022 Taxable income
of more than (€) but no more
than (€) Rate for 2022 (%) 1st band - 69,398 37.07 2nd band 69,398 - 49.50
The corporation tax rate for 2022 will also remain as previously announced:
Corporation tax 2021 2022 Profit up to € 245,000/€ 395,000 15.0% 15.0% Profit above € 245,000/€ 395,000 25.0% 25.0%
In a judgment the EU Court of Justice has ruled that domestic and foreign companies must be treated equally. In the Netherlands too, domestic companies are treated differently from foreign companies when it comes to refunding forms of advance corporation tax, such as dividend tax. To bring Dutch legislation into line with EU law, the government is proposing the following:
Three changes are being made to the homeownership scheme with effect from 1 January 2022. The scheme is being made fairer by removing unintended restrictions on mortgage interest relief.
To eliminate these restrictions, changes are therefore being made in relation to the home equity reserve, the repayment balance and the existing home acquisition debt (this is a loan taken out to purchase your own home before 1 January 2013).
Since 1 January 2021 first-time buyers under the age of 35 have not paid any transfer tax when purchasing their home (one-off exemption). Buyers aged 35 and over who will be living in the property themselves have paid 2%, while buyers who will not be residing in the property themselves have paid 8%. Under the government’s proposal, buyers will not automatically be subject to the general rate (8%) if unforeseen circumstances arise after the purchase, but before the transfer. Certain conditions must be met, however.
What important tax proposals for entrepreneurs did the caretaker Minister of Finance pull from his briefcase on Prince’s Day? An explanation of the ten most important ones is provided below.
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Additional funds are also being made available for income support via the Temporary Support for Necessary Costs (TONK) scheme. This was announced by the government on Friday, 12 March.
The TVL is a contribution towards fixed costs for entrepreneurs who suffer a drop in turnover of at least 30% as a result of the coronavirus crisis. This contribution was increased to 85% from 1 January and will be raised to 100% from 1 April.
To determine the level of your company’s fixed costs, the industry average will be taken as a basis by referring to your SBI code in the Commercial Register. A company’s actual fixed costs do not determine the compensation. The fixed costs as a percentage of turnover are therefore fixed for your industry and are linked to your SBI code.
State Secretary Mona Keijzer (Economic Affairs and Climate Policy) also recently announced that entrepreneurs whose actual main business activity differs from the SBI code in the Commercial Register of the Chamber of Commerce can still qualify for compensation under the TVL or for a higher level of compensation than they would receive on the basis of their SBI code. This is a consequence of a court ruling.
Hardship clauses are therefore being included in the TVL. These make it possible to deviate from the SBI code if the entrepreneur plausibly demonstrates that the actual main activity of the business differs from this. This possibility of diverging from the SBI code will apply with retroactive effect from 1 January 2021.
TVL applications for the first quarter of 2021 can be submitted via rvo.nl until 5 p.m. on 30 April. The TVL application period for the second quarter of 2021 is expected to open from mid-May.
Under the TVL for the second quarter a supplement of 21% will now be available only to agricultural and horticultural businesses. The supplements for non-food retail outlets and the travel sector are being withdrawn from the TVL scheme in the second quarter.
In addition to the expansion of the TVL, the government is also making significantly more funding available for income support via the TONK scheme. A sum of € 130 million had originally been allocated to this scheme, but this is now being raised to € 260 million. The TONK is intended for people who are no longer able to cover their fixed costs, due to a loss of income resulting from the coronavirus crisis, and focuses in particular on housing costs.
Applications under the TONK can be submitted to your local authority with retroactive effect from 1 January of this year. The opening date for applications differs from one local authority to another. The target group that is eligible for the TONK and the level of the contribution are also at the local authority’s discretion and may therefore differ between local authorities. However, the government has called on local authorities to be generous in the granting of TONK payments.
You are eligible for the TONK if you are aged 18 or above, have suffered a significant loss of income due to the coronavirus crisis, are no longer able to cover your housing costs out of your income or assets and other financial support is insufficient. Other conditions also apply, which can differ from one local authority to another.
Please note:Your local authority will determine the level of assets you can have while still remaining eligible for the TONK. This can therefore differ between local authorities.
The term ‘housing costs’ refers to rent or mortgage payments, but also to costs of electricity, gas and water, service costs and municipal taxes. Your local authority will determine which costs can be covered by the TONK.
The compensation available under the Reimbursement of Fixed Costs for SMEs scheme (TVL) is being increased once again. For the second quarter of this year, i.e. from April to the end of June, compensation amounting to 100% of fixed costs will apply.
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The NOW scheme is a contribution towards payroll costs for companies that have suffered a drop in turnover of at least 20% as a result of the coronavirus crisis. This was initially capped at 90% of payroll costs and from 1 January 2021 will not exceed 85% of payroll costs. From 1 April 2021 more stringent conditions will apply and the level of the payroll costs subsidy will also be reduced.
Employers who have applied for a subsidy initially receive an advance payment after submitting their application. The UWV can only calculate the definitive subsidy once the actual drop in turnover is known. To allow this calculation to be made, employers have to submit a separate ‘application for definitive determination of the subsidy’ for each application period.
Due to, amongst other things, the complexity of the applications and the workload that accountancy firms are facing, the decision has been taken to extend the application period for definitive determination of the subsidy under NOW 1.0 until 31 October 2021. The application periods for definitive determination of the other subsidies under the NOW scheme have also been extended.
Please note:The opening date for applications for determination of the subsidy under NOW 2.0 has also been brought forward from 15 April 2021 to 15 March 2021.
NOW period UWV application period Period for definitive application to UWV NOW 1.0 1-03-2020 to 30-05-2020 1 7-10-2020 to 31-10-2021 NOW 2.0 1-06-2020 to 30-09-2020 2 15-03-2021 to 5-01-2022 NOW 3.1 1-10-2020 to 31-12-2020 3 4-10-2021 to 26-06-2022 NOW 3.2 1-01-2021 to 31-03-2021 4 31-01-2022 to 23-10-2022 NOW 3.3 1-04-2021 to 30-06-2021 5 31-01-2022 to 23-10-2022
When the definitive subsidy is determined a portion of the advance already paid out may be reclaimed. Due to the ongoing restrictions associated with the lockdown, this could put companies in financial difficulty.
Please note: The UWV is therefore offering generous payment schemes that take the personal situation of employers into account. One of the options is a deferment of payments.
Employers are being given more time to submit their definitive application for the payroll costs subsidy under the NOW scheme (Temporary Emergency Bridging Measure for Sustained Employment). Minister Wouter Koolmees has announced that the deadline for applying for definitive determination of the subsidy under NOW 1.0 has been extended until 31 October 2021.
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The contribution towards payroll costs under the Temporary Emergency Bridging Measure for Sustained Employment (NOW scheme) is being expanded rather than scaled back. The maximum compensation under the scheme will amount to 85% instead of the current level of 80% in the event of a 100% drop in turnover. The reduction in the maximum amount paid per employee from twice to 1x the maximum daily wage, which was expected to apply from 1 April, has been scrapped.
The TVL is also being expanded. From a drop in turnover of 30% entrepreneurs will receive compensation amounting to 85% of their fixed costs. This means there will no longer be a sliding scale of compensation. From 1 January the scheme is also open to companies with more than 250 employees. In addition, a similar scheme is being introduced for the agricultural and horticultural sector.
The maximum payment under the TVL is increasing further from € 90,000 to € 330,000 and to € 400,000 for companies with more than 250 employees. The minimum amount of support offered by the TVL will rise from € 750 to € 1,500. Additional support will also be made available via the TVL for start-ups.
Due to the compulsory closure of non-essential shops, the stock subsidy for retail outlets in the non-food sector is also going up. In the first quarter of 2021 the supplement on top of the TVL will amount to 21%. This equates to a subsidy of 17.85% of turnover (21% x 85%). The maximum amount is also being raised to € 200,000. This subsidy will not be limited by the maximum amounts payable under the TVL itself.
Contrary to previous plans, a means test will not be introduced from 1 April 2021 for the Temporary Bridging Scheme for Independent Entrepreneurs (Tozo). This means that self-employed persons whose income falls below the minimum social income and who have assets will also be eligible for income support.
A package of additional tax measures has also been introduced:
Entrepreneurs who have been severely affected by the measures taken to deal with the coronavirus will again be receiving financial compensation. Existing measures are being improved and new ones introduced.
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These questions are now arising, with the prospect of a large-scale vaccination programme getting under way next year. Vaccinations will be given on the basis of a priority list.
Can an employer oblige an employee to receive a vaccination? The answer to this question is ‘no’. An employee has a right to physical integrity and this is enshrined in the Constitution. It is therefore up to the employee to decide whether or not to be vaccinated. Vaccination takes place on a voluntary basis.
An employer cannot therefore oblige his or her employees to receive a vaccination. Although the employer has a duty of care with regard to an employee’s health and safety and his or her working conditions, this does not extend to being able to force the employee to be vaccinated. It is also not permitted to put the employee under pressure to receive a vaccination. After all, we are talking here about health data and this is subject to privacy legislation.
Please note:If an employee who has not been vaccinated falls ill, the employer also has an obligation to continue paying his or her salary in this situation.
During a job interview it is also not permitted to ask the candidate whether he or she has been or plans to be vaccinated. After all, this is also health data. Health data is a specific item of personal data whose processing is prohibited, unless a statutory exemption applies. The explicit consent of the employee is insufficient, as – in view of the relationship of dependency – it is possible to question whether the consent was given voluntarily.
An obligation to be vaccinated can only be included as a job requirement if there is a legitimate aim and the means of achieving that aim are appropriate and necessary. After all, this means that a distinction is being introduced between staff who have and staff who have not been vaccinated. As mentioned above, the principle of physical integrity and the right of self-determination apply. Including an obligation to be vaccinated in a job requirement is not justified by a legitimate aim.
If vaccination is essential to be able to carry out the work in question safely, as in the case of a candidate for a healthcare role, the employer can demand that the candidate undergo a medical examination. On the basis of the Medical Examinations Act, it is permitted for the company doctor to ask the candidate whether he or she has been vaccinated. The company doctor will subsequently indicate whether or not the candidate is suitable for the role. The reason for this conclusion is not given.
Can an employer oblige healthcare workers on permanent contracts to receive a vaccination? This is a difficult question to answer, as everything is new when it comes to the coronavirus and there is no case-law in this area. We can infer from past case-law, however, that in such cases the court will often weigh up the individual and collective interests.
Can an employer oblige an employee to receive a vaccination? Are you allowed to ask a candidate whether he or she has been vaccinated during a job interview? Can you include an obligation to be vaccinated in the job requirements? Is the answer to this last question different in the case of healthcare personnel?
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The fixed budget under the work-related expenses scheme (WKR) has been expanded this year. Up to a wage bill of € 400,000 the fixed budget amounts to 3%, with 1.2% applying to the excess amount. Assess the fixed budget you have remaining and make full use of it. Be sure to take advantage of the cost-efficiency threshold of € 2,400 per person per year. Up to this amount the Tax and Customs Administration will regard any allowances and benefits in kind granted as customary allowances and benefits. Only make use of the group scheme under the work-related expenses scheme if this will work out in your favor. As the fixed budget has been increased, this is less often the case than it was last year.
If your companies currently form part of a tax group, it may be beneficial to disband it. The tax group pays corporation tax on the combined profits of all the companies. In view of the increasing gap between the lower and higher rates of corporation tax, disbanding a tax group is becoming a more attractive option. From 2021, after all, there will be a difference of 10 percentage points between the rate in the first band and the higher rate (15% and 25% respectively). The lower rate will apply to the first € 245,000 of profits from 2021 and even to the first € 395,000 of profits from 2022.
If you purchase a commercial property, this year you will owe transfer tax at a rate of 6%. This rate will increase to 8% from 2021. We therefore recommended that, if possible, you complete a planned purchase of a commercial property before 2021.
As an entrepreneur, you are best off waiting until after 31 December to transfer liquid assets that generate low returns, such as cash in your business bank account, to your private assets. In this way you will avoid the relatively high tax in box 3. Conversely, it makes sense to transfer any necessary cash from your private assets to your business account before 31 December this year.
As a private individual, you can avoid the high rate of tax that applies in box 3, in particular to savings, by setting up a ‘savings company’ (‘spaar-bv’) or a mutual fund. You will then pay around 38% tax on the return actually received up to € 245,000. This is considerably less than the 0.59% to 1.76% tax that you will pay on your savings balances in box 3 in 2021, although you need to bear in mind that the exempted income in box 3 is being increased to € 50,000 per person in 2021.
The rate of tax on substantial shareholdings (box 2) will be increasing from 26.25% to 26.9% in 2021. It may therefore be worthwhile to have any dividend paid out before 2021, if this payment will be used for spending or to pay off an excessive loan from your company. If you will not be using the dividend for one of these purposes, it will form part of your private assets and will be taxed in box 3. Whether this option is attractive depends, amongst other things, on whether you have savings or investments in box 3, what return is achieved and how much tax you are paying on it.
From 1 January 2021 young people between the ages of 18 and 34 will be exempt from transfer tax when buying their own home. As of 1 April 2021 this exemption will only apply to homes with a value up to € 400,000. This is a one-off exemption, which means that if young persons within this category have already bought a home, they will still be entitled to the exemption if they buy another home. After all, they will not have previously made use of the exemption. One condition here is that they will live in the home themselves as their main place of residence. The exemption will result in a 2% saving in transfer tax.
If you are an entrepreneur and are planning to buy an electric car in the near future, it is advisable to do so before the end of 2020. That is because, from 2021, the 8% addition to taxable income for electric cars will be increasing to 12%. Furthermore, this 12% addition will apply only to the first € 40,000 of the list price instead of the first € 45,000, as is currently the case. A rate of 22% will be payable on the excess amount. The lower rate of the addition will apply for a period of 60 months from the date on which the vehicle first enters use.
As a director/major shareholder (DGA), you are entitled to deduct expense allowances from your customary salary. It makes no difference whether these expense allowances are taxed or untaxed. The addition to taxable income for private use of a company car also counts towards your customary salary. In the case of a car costing € 60,000 and an addition to taxable income of 22%, for example, you can therefore reduce your customary salary by € 13,200. As a DGA, reducing your customary salary means you will pay less tax in box 1.
If you make investments, in principle you are entitled to the small projects investment allowance (KIA). Planning your investments and, where possible, spreading them out is often worth the effort. For example, investing € 50,000 in 2020 and 2021 results in a KIA of € 28,000, while investing € 100,000 in 2020 and € 0 in 2021 entitles you to a KIA of just € 16,307. It is therefore worth getting the right advice if you want to take advantage of the KIA.
This year you can once again take advantage of the exemptions from gift tax. In 2020 you can make a tax-free gift of € 5,515 to your children and of € 2,208 to your grandchildren or third parties. For children between the ages of 18 and 40 this amount has also been increased this year on a one-off basis to:
The one-off donation of € 103,643 to buy a home also applies to persons other than your own children. If you make a gift in 2020, your assets in box 3 will fall, which can result in tax savings for you.
Please note: As a result of the coronavirus crisis, both the exemption for children and the exemption for grandchildren and third parties will be subject to a one-off increase of € 1,000 in 2021. The exemption will therefore amount to € 6,604 for gifts to children and € 3,244 for gifts to grandchildren and third parties in 2021. This increase will be reversed in 2022.
It has been an extraordinary year. As an entrepreneur, there is a good chance that this year, more than ever before, you could benefit from some useful tax-related and other year-end tips. We have picked out ten for you here.
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The fixed budget under the work-related expenses scheme (WKR) has been expanded this year. Up to a wage bill of € 400,000 the fixed budget amounts to 3%, with 1.2% applying to the excess amount. Assess the fixed budget you have remaining and make full use of it. Be sure to take advantage of the cost-efficiency threshold of € 2,400 per person per year. Up to this amount the Tax and Customs Administration will regard any allowances and benefits in kind granted as customary allowances and benefits. Only make use of the group scheme under the work-related expenses scheme if this will work out in your favor. As the fixed budget has been increased, this is less often the case than it was last year.
If your companies currently form part of a tax group, it may be beneficial to disband it. The tax group pays corporation tax on the combined profits of all the companies. In view of the increasing gap between the lower and higher rates of corporation tax, disbanding a tax group is becoming a more attractive option. From 2021, after all, there will be a difference of 10 percentage points between the rate in the first band and the higher rate (15% and 25% respectively). The lower rate will apply to the first € 245,000 of profits from 2021 and even to the first € 395,000 of profits from 2022.
If you purchase a commercial property, this year you will owe transfer tax at a rate of 6%. This rate will increase to 8% from 2021. We therefore recommended that, if possible, you complete a planned purchase of a commercial property before 2021.
As an entrepreneur, you are best off waiting until after 31 December to transfer liquid assets that generate low returns, such as cash in your business bank account, to your private assets. In this way you will avoid the relatively high tax in box 3. Conversely, it makes sense to transfer any necessary cash from your private assets to your business account before 31 December this year.
As a private individual, you can avoid the high rate of tax that applies in box 3, in particular to savings, by setting up a ‘savings company’ (‘spaar-bv’) or a mutual fund. You will then pay around 38% tax on the return actually received up to € 245,000. This is considerably less than the 0.59% to 1.76% tax that you will pay on your savings balances in box 3 in 2021, although you need to bear in mind that the exempted income in box 3 is being increased to € 50,000 per person in 2021.
The rate of tax on substantial shareholdings (box 2) will be increasing from 26.25% to 26.9% in 2021. It may therefore be worthwhile to have any dividend paid out before 2021, if this payment will be used for spending or to pay off an excessive loan from your company. If you will not be using the dividend for one of these purposes, it will form part of your private assets and will be taxed in box 3. Whether this option is attractive depends, amongst other things, on whether you have savings or investments in box 3, what return is achieved and how much tax you are paying on it.
From 2021 young people between the ages of 18 and 34 will be exempt from transfer tax when buying their own home. This exemption can be applied once, which means that if they already own their own home, they will still be entitled to the exemption if they buy another home, as they will not have previously made use of it. One condition here is that they will live in the home themselves as their main place of residence. The exemption will result in a 2% saving in transfer tax.
If you are an entrepreneur and are planning to buy an electric car in the near future, it is advisable to do so before the end of 2020. That is because, from 2021, the 8% addition to taxable income for electric cars will be increasing to 12%. Furthermore, this 12% addition will apply only to the first € 40,000 of the list price instead of the first € 45,000, as is currently the case. A rate of 22% will be payable on the excess amount. The lower rate of the addition will apply for a period of 60 months from the date on which the vehicle first enters use.
As a director/major shareholder (DGA), you are entitled to deduct expense allowances from your customary salary. It makes no difference whether these expense allowances are taxed or untaxed. The addition to taxable income for private use of a company car also counts towards your customary salary. In the case of a car costing € 60,000 and an addition to taxable income of 22%, for example, you can therefore reduce your customary salary by € 13,200. As a DGA, reducing your customary salary means you will pay less tax in box 1.
If you make investments, in principle you are entitled to the small projects investment allowance (KIA). Planning your investments and, where possible, spreading them out is often worth the effort. For example, investing € 50,000 in 2020 and 2021 results in a KIA of € 28,000, while investing € 100,000 in 2020 and € 0 in 2021 entitles you to a KIA of just € 16,307. It is therefore worth getting the right advice if you want to take advantage of the KIA.
This year you can once again take advantage of the exemptions from gift tax. In 2020 you can make a tax-free gift of € 5,515 to your children and of € 2,208 to your grandchildren or third parties. For children between the ages of 18 and 40 this amount has also been increased this year on a one-off basis to:
The one-off donation of € 103,643 to buy a home also applies to persons other than your own children. If you make a gift in 2020, your assets in box 3 will fall, which can result in tax savings for you.
It has been an extraordinary year. As an entrepreneur, there is a good chance that this year, more than ever before, you could benefit from some useful tax-related and other year-end tips. We have picked out ten for you here.
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