Are you an entrepreneur paying income tax in the Netherlands, and would you like to cycle more often? As cycling is good for people and the environment, certain legal and fiscal benefits have been made available by the government to encourage an increase in cycling. For example, as an entrepreneur you can purchase a ‘company bicycle’. There are different conditions and regulations for different situations. Below Artlupa has provided some information on this topic.

As an entrepreneur, you can put a bicycle that you use for business purposes 'on the business'. This has implications for your income tax return and the SalesTax.

For entrepreneur’s paying income tax, there are various options for the way a company bicycle can be treated for tax purposes. Each option works slightly differently from a tax point of view. Below we have summarised how this works for each option:

You use your private bike for business trips

Have you bought your bike privately and do you occasionally ride it for business? Then you may deduct a mileage allowance for these trips from your income tax. Of all kilometers driven for business, you can claim an amount of €0.23 per kilometer (was €0.21 until 2024) as costs and deduct it from your profit. You must be able to account for these kilometers in your administration.

You don't use your company bike privately

If you purchase a company bicycle and only use it for work purposes, the bicycle applies to the company administration for income tax purposes in full. All costs related to the bicycle (such as insurance, maintenance, damage) are then deducted from your profit. There are therefore no additional costs or taxes.

You also use your company bike privately

When you buy a company bicycle and use it both for business and private purposes, costs related to the bicycle are deductible from your profit in income tax. As an entrepreneur, you can buy an (electric) bicycle for your company if you use it 10% or more for business purposes. The other use is private and you therefore have to pay 7% addition to the List price  (in Dutch) of the bicycle. You declare the additional tax as profit. As with other business purchases, you can deduct the costs of the bicycle from your profit and reclaim the VAT.

Please note: if you use the bike for both business and private purposes, you can only reclaim part of the VAT as pre-tax. You can read how that works Here (Dutch only). As a self-employed person, you are not entitled to a mileage allowance.

Want to know more?

Our sister company Lexlupa also has articles about the tax rules for the bicycle plan for employees and DGA. If, as an employer, you want to encourage more cycling amongst your employees, you can participate in the campaign 'thats how you cycle' (in Dutch). In this article  by the NFP Group you can read more (in Dutch) about bicycle plans and tax benefits for employees (Dutch only). Maybe you would like more information about company cars and tax benefits for entrepreneurs in income tax.

The most important new (tax) rules at a glance

On January 1, 2024, sixteen new laws/legislative changes will come into effect that may have consequences for your company's tax situation. Lupacompany  has published information about these changes in a previous newsletter: it details what to expect as a result of the 2024 tax plan. Below you will find a list of the final legislative changes that have been made for business taxes and levies:

1. Business succession and takeover

Regulations for the takeover of a company, Business Succession (BOR) and the transfer arrangement Scheme (DSR) only apply to business assets. Assets from the rental of real estate are no longer covered by the scheme. In 2025, OOM investment assets and business assets of more than € 100.000 that are also used privately will be excluded from the BOR and DSR.

2. Profit exemption

The profit exemption for self-employed persons and SMEs on income tax will be reduced from 14% in 2023 to 12.7% in 2024. Entrepreneurs will therefore pay more tax on their profits.

3. Donation exemptions

The deduction of donations from corporate income tax will change. As of 2024, making donations to an ANBI/SBBI will no longer be seen as a disguised profit distribution. As a result, these donations are no longer taxed (in income or dividend tax) and are no longer deductible from the profit (in the corporate income tax).

4. Box 3 tariffs

The income tax rate in Box 3 has been increased from 32% to 34% coming into effect on the 1st January. At € 57,000, the tax-free allowance in box 3 remains the same as last year.

5. Third-party account

Money from entrepreneurs (self-employed, general partnership, CV and MTS) in a third-party account at a notary's office or law firm will now be seen as bank balance for tax purposes, instead of an investment. As a result, this credit is less heavily taxed.

Please note: this regulation will take effect retroactively on 1 January 2024. The lower tax rate is already applied to the 2023 tax return. This can make a significant difference: The rate charged for the past year on funds in a third-party account is not 6.17%, but 0.36%.

6. Reinvestment reserve

The reinvestment reserve (HIR) allows you to postpone the payment of tax on profits from the sale of business assets under certain conditions. As of 1st January, this rule also applies to entrepreneurs who halt part of their business as a result of government measures. They can use the reserve to make a new investment in another company.

7. Caribbean Netherlands

As of the new year, the tax system in Bonaire, St. Eustatius and Saba has been brought more inline with the Dutch tax system. Is your company based in the Caribbean Netherlands? Then you can read here (in Dutch) what the changes entail.

8. Fees for objections to WOZ and bpm

As of 1st January, the municipality or tax authorities will pay legal costs for objections to WOZ and bpm provisions directly to the objector and no longer to the objection agencies.

9. Energy investment deduction

The deduction scheme for investments in energy-saving/sustainable business assets (EIA) will be extended until 2029. The deduction percentage will be lower in this period than it was previously: it will decrease from 45.5% to 40% in 2024.

10. Public transport card

From 1st January 2024, employers will be allowed to reimburse or issue a (partially) for business public transport card to an employee, exempt from income tax. Even if the employee uses the card for private travel.

11. Excise duty on alcohol

Entrepreneurs who sell alcoholic beverages will see an increase in excise duty of 16.2% as of 2024.

12. Self-employed person's deduction

The amount that you can deduct from your profit as a self-employed person will also be subject to an annual reduction in 2024. In 2024, the threshold amount will be € 3,750. In 2023, this was € 5,030.

13. Reimbursement of travel expenses

As of 1st January, employers may reimburse employees up to € 0.23 per kilometer as a travel allowance tax-free. Self-employed persons can deduct the same rate from their profits for kilometers travelled for business.

14. Income tax reduction

Entrepreneurs paying income tax who previously received a payment discount when they paid their provisional assessment in one go, (instead of several instalments) are no longer entitled to this discount. The payment discount on the provisional assessment expired on 1st January.

15. Box 2

From 2024, Box 2 for income tax will have two separate rates for partners, directors and major shareholders with a substantial interest (> 5% shares. From now on, a basic rate of 24.5% will be applied for income up to € 67,000. Income above this amount will be subject to a rate of 31%.

16. New withholding tax

Money flowing from or via the Netherlands to so-called 'tax havens' will be taxed with a new withholding tax as of 1 January.

Not fiscal, but relevant

In addition to tax changes, other laws have also been amended and introduced that may affect you as an entrepreneur:

Establishing a private limited company

As of 1st January, it is possible to set up a private limited company online. A physical visit to the notary is no longer mandatory.

Environment and Planning Act

As of 2024, environmental law will be incorporated into the Environment and Planning Act: In order to make it easier and faster to apply for a permit. 26 previous laws relating to space, housing and infrastructure, among other things, will be brought together in one overarching Environment and Planning Act.

Sustainability

In the field of climate and sustainability, we see a number of striking changes as of 1st January. For example, if you have more than 100 employees, you must report annually on the business and commuting traffic of your staff. Listed companies/large companies will also have to report on their sustainability policies.

Minimum wage

The Minimum Wage and Minimum Holiday Allowance Act has been amended: instead of a statutory monthly wage, a statutory hourly wage will be mandatory. This makes the minimum wage per hour the same for everyone, regardless of the number of hours worked.

30% ruling

If you hire a foreign employee with a specific talent or expertise, it is no longer possible to reimburse his or her costs for a move to the Netherlands tax-free indefinitely. This means relocation costs that are reimbursed tax free, are limited to a maximum. This maximum amount depends on the way in which the top income in your specific sector is standardized. As of 2024, you are allowed to pay no more than 30% of this standardized number. (In most cases this is 30% of € 233.000). You can check the top income in your sector here (in Dutch).

State pension age

On 1st January 2024, the state pension age was raised to 67 years.

Find out more

If you want to know more about the (tax) rules for entrepreneurs as of 2024 for income tax, you can go to  this page of the Tax and Customs Administration (in Dutch). Changes to corporate income tax can be found (in Dutch) here. Do you have questions about the consequences of one of the new regulations for your company? Feel free to contact us. We are here to help.

If you are closing a foundation in the Netherlands, you can do so quickly and easily: in the case of no assets, debts, personnel and company status, it is arranged with a board decision and a deregistration at the Chamber of Commerce. But if there are assets, debts or tax liabilities, the process you have to go through is more extensive and sometimes complex. We explain below which steps you need to take.

Administrative decision

The formal decision to dissolve a foundation must be taken in the board meeting of the foundation. If there is a Supervisory Board, it must first approve the proposal for dissolution. Ensure that the formal dissolution decision is taken in accordance with your articles of association (or: statutes). It sets out the requirements for abolition.  For example, it may be stipulated in the articles of association that a large majority must agree with the proposal, and/or that a minimum number of board members must be present at the vote. The administrative decision is invalid if agreement has not been reached in the established manner.

Convoke

As mentioned above, the dissolution of a foundation can be quick and easy. Does the foundation have neither assets nor debts and no tax obligations for VAT, corporate income tax or payroll taxes? Then fill in this form (in Dutch only) and send it by post to the Chamber of Commerce in your region. It is important that you include the dissolution decision. In principle, these are the minutes/records of the board meeting (see above) in which agreement was reached on the dissolution. You will then receive a confirmation of dissolution and the foundation is officially dissolved.

Settling debts or assets

If the foundation has debts or assets, these must be settled before dissolution can be carried out. For this you are obliged to appoint a liquidator: someone who draws up the final balance sheet and determines what happens to the debts or the capital that remains below the line.

Settlement of debts

Does the balance turn negative? Then it must be determined how outstanding costs are paid off.  The Chamber of Commerce can help you determine how debts can be settled. In this article it is specified in English for foundations in the Netherlands. If there are debts with the tax authorities that cannot be paid on time, please read this article by the Dutch government. You must report that there is inability to pay (request for payment schedule and delayed payment of taxes and/or contributions for businesses – in Dutch) You will not automatically receive a waiver with this notification. Is the foundation unable to settle the debts? Then you have to file for bankruptcy.

Liquidation of assets

A balance sheet with a positive result must be liquidated at foundations as laid down in the articles of association. Does the foundation have an ANBI status? According to the liquidation provision for cultural ANBIs, a positive liquidation balance must be spent on a (comparable) ANBI (see box).

If your debts or assets have been settled, you dissolve the foundation with a deregistration at the Chamber of Commerce. You do this by depositing this form  (in Dutch only) at the Chamber of Commerce office in your region. You also send the dissolution decision of the board (see above), in which needs to be included what happens to any remaining balance and who as liquidator is responsible for the settlement of this.

Cancelling an ANBI designation

ANBI's themselves are obliged to report it if the ANBI designation has to be terminated. This may be the case in the event of dissolution, merger or change of objective and no longer meeting the conditions. Termination of the ANBI status can be arranged in writing by sending a letter to the ANBI Expertise Centre.

Will a designation as an ANBI be terminated in 2013 or later and does the institution have a capital of €25,000 or more? Then, after the termination, you are obliged to provide information about the course of the assets. To comply with the obligation to provide information, you fill in an annual form (available here).

In this article we explain more about (applying for, changing or cancelling) the ANBI status.

Tax consequences of when closing a foundation

If the foundation was characterized as a company for tax purposes, then you may be liable for VAT and corporation tax and of course you want this obligation to lapse upon dissolution. Also, if the foundation employs staff, you will have to start a procedure to terminate the payroll tax obligation.

VAT and corporate income tax

If you dissolve your foundation at the Chamber of Commerce, the Chamber of Commerce will pass on your deregistration  to the tax authorities. You will then receive a letter from the tax authorities stating when the obligation to declare expires. Please note that you continue to file a declaration until this moment, even if you have nothing to declare. Foundations in the corporate income tax must submit a final statement of account with the last VpB return (corporation tax). Your accountant can help you with this. 

Payroll taxes

For a foundation with staff employed, dissolution results in employees being dismissed. For this you have to arrange various things: notice must be given, a dismissal permit must be applied for, a social plan drawn up, transition payments must be paid. In this article we explain in more detail which steps an employer must take in the event of dismissal. With regard to the tax consequences of disbanding the foundation, it is important that you inform the tax authorities that the payroll tax obligation no longer applies. You send this
form (in Dutch) to the tax authorities. As with VAT and VpB, continue to file a tax return until you have an official confirmation of the date as of when the payroll tax obligation ends. If you have nothing to indicate - because, no more staff - you turn in a nil declaration.

Find out more

Check the links if you want to read our articles about the foundation, the  ANBI status, Wbtr legislation (new rules for foundations and associations as of July 1st, 2021) or a step-by-step plan for dismissal. Of course, you can also contact us with questions, for help with Dutch forms or more information. We are happy to help you.

Do you, as a self-employed person or SME, supply goods or services to a large company? As of 1 July 2022, the legal payment term of monetary claims by your company has been shortened from 60 to 30 days. Large companies therefore must pay your invoices faster.

For whom has the legal payment term been shortened?

To investigate whether your customer is obliged to shorten the maximum payment term to 30 days, check whether the company meets the following criteria:

• the company has a balance sheet total of more than € 20 million.
• the company has a net turnover of more than € 40 million.
• the company employs 250 employees or more.

Does a company to which you supply goods or services meet at least two of the three above criteria? Then it is obliged to observe the shorter payment term. You can adjust the payment term on your invoice. If your company is a large company according to the above definition, then incoming invoices from smaller organizations must be paid within 30 days.

Extend payment term

Although payment deadlines are set by law, you can agree on a longer payment term in certain situations. The criteria for extending a payment term are as follows:

• The debtor has objective reasons for derogating from the time limit.
• The nature of the service requires a longer payment term.
• Significant deviation from good commercial practice.

Legal payment term for smaller companies

If you legally have a 'smaller company', then nothing changes in the payment term for incoming invoices. For these companies, the legislator had already included a payment deadline for pecuniary claims of 60 days. This period shall remain the same.

Transitional period for existing agreements

For existing agreements on your payment term, a transitional period of one year applies. As a result, payment terms on current agreements from before 1 July 2022 do not have to be shortened immediately. But as of 1 July 2023, these agreements must also be adapted to the shortened payment term. Does your customer not arrange in time for the payment term of 30 days to be observed? Then the clause in the agreement that establishes a longer payment term becomes legally invalid.

Overdue payments

If the invoices that you send to a large company as a self-employed person or SME are not paid within the legal payment term, you are entitled to penalty interest. The customer owes 8% interest on the invoice amount for the period that the payment is late. You can claim this commercial interest up to 5 years after the payment deadline. Any collection/procedural costs are also for the account of the defaulter (provided that he has no valid reasons - such as invalid performance - to exceed the payment term). You can (anonymously) report to the Overdue Payment tip off  in the event of non-payment by a large company. An estimate is then made whether the company should be placed under supervision.

Payment term to foreign suppliers

If you sell goods or services to a Dutch large company as a non-Dutch company, this company is bound by Dutch law. That is why he must also pay foreign SMEs that deliver to him within 30 days. As a large company, do you take away from foreign SMEs? Then make sure that you pay your invoices within the new term, or that you adjust long-term agreements within a year.

Read more

On the English website for Dutch governmental information for entrepreneurs you will find more information about the halved payment term. Lexlupa wrote this article about invoicing and VAT.

Do you want to be well prepared for fiscal changes in the new year? In this article we explain six expected changes, on which you may want to participate in the coming period with our end-of-year tips.

The following tax plans for 2023 will only be final after they have been approved by the First Chamber at the end of December. We will publish an overview of the final changes on our website in early 2023.

Tip 1
Pay off excessive debts DGA

Do you borrow money from your own company? As of 2023, an upper limit of 700,000 will be introduced as a tax-free sum. Borrowed money above this amount is taxed with 26.9% income tax. We therefore advise you to repay debts above this amount before 31 December 2023 (the first review moment).

Tip 2
Equalize assets between you and your tax partner Box 3

By making use of the possibility for tax partners to equalize assets on paper, you can obtain a tax benefit in box 3. With the returns, Lupacompany takes into account the possibility of declaring the taxable Box 3 capital as attractive as possible for tax purposes.

Tip 3
Participe on rising recovery interest

The reduction of recovery interest as a result of corona will be adjusted upwards step by step. In order to make use of a lower rate, it is therefore important to repay in time if possible. On July 1st. the interest rate has already been increased from 0 to 1%. Every year (as of 1 January) one percent will be added, until it reaches 4% as of 2024.

Tip 4
Take into account a reduction of bracket 1 in the Vpb

As of 2023, the limit for the first bracket in corporate income tax will be significantly reduced. This is then no longer € 395,000, but reduced to € 200,000. Above this amount, your company pays the high rate (25.8%). In addition, the rate over the first € 200,000 (bracket 1) will be increased from 15 to 19%.

Tip 5
Tax free donating for housing? Don't wait too long!

Do you want to make use of the scheme whereby you can donate up to 106,671 euros untaxed for someone to buy their own home? Then you have to do that this year. Because as of 2023 it is only possible to donate up to € 28,947 tax-free for the purchase of living space. As of 1 January 2024, the scheme will even be abolished altogether. Previously issued tax-free donations must be spent before 2025.

Tip 6
Check changes to fiscal old-age reserve (FOR)

The government intends to implement that as of 1 January 2023, the old-age reserve can no longer be built up. New build-up of the reserve is therefore no longer possible. If you currently make use of the FOR scheme, this will mean that you cannot continue with this. Already built up old-age reserve can be settled according to the current rules. That means that the entire amount is released in one go or can be converted into an annuity product.

The standard VAT-tariff in The Netherlands is 21%. As an entrepreneur you would assume that you have to charge 21% VAT on outgoing invoices and pay the same percentage VAT as preliminal taxes for your incoming invoices. However, to make certain goods and services more appealing, a reduced VAT-tariff of 9% has been created. This way the government stimulates the accessibility of these products and services. However, it is not always clear what goods and services are charged with this reduced VAT-tariff. In this article we will list all of them.

Goods taxed with 9% VAT

1. Foodstuff: all foodstuff for human consumption fall under the lower tariff. Alcoholic beverages, tobacco, and foodstuff for animals are the exception. 
2. Water: Some types of water fall under the 9% reduced VAT-tariff. Others (like seawater or steam) fall under the 21% tariff. To see what tariff applies to the water you supply, check here* 
3. Agricultural goods like cattle feed, straw and seeds fall under the reduced tariff.
4. To increase the accessibility of medicine and aids, these products are also taxed with the 9% tariff. These include birth control, infusion fluids and inhalations gasses.
5. In a number of cases art, collectors items and antiques are also taxes at 9% VAT. Check here* what the conditions are. 
6. Books, magazines, periodicals also fall under the 9% tariff. Magazines must be published at least three times a year to be eligible for the reduced tariff. 

If you want more detailed information on goods taxed with 9% VAT, you can read about it   here.

Services taxed with 9% reduced VAT-tariff

1. Repairs for bicycles, shoes, leather, clothing and household linen are taxed at the reduced tariff of 9%. 
2. Hairdressing services. Pay attention, the sale of haircare products, tending the hair of animals and other beauty treatments are taxed at 21% VAT. 
3. Renovations to homes that are older than two years fall under the reduced tariff. 
4. Granting access to camping facilities and lodging for short stays (maximum 6 months per year). 
5. Artist performances with public being part of the performance directly (for example a dance performance) or indirectly (for example a recording). The VAT-tariff for artist differs per service. Check here* to know for sure if you are using the correct tariff. 
6. Sport events: offering the opportunity for sporting events, swimming pools and sauna’s fall under the 9% tariff. 
7. Passenger transport such as taxis and public transport are taxes at 9% VAT. 
8. Supplying goods that are taxed at 9% VAT also fall under the same low VAT-tariff. 

Do you still have questions? Read in more detail about the 9% reduced VAT-tariff   here*.

Combinations

It can happen that as an entrepreneur you offer a combination of goods and/or services with different VAT tariffs. In some cases you will need to calculate and bill these tariffs separately. However, in other situations the combination will fall under one tariff. The principle here is that the consumer will see the goods and services as a whole. For example, the repairs of a bicycle mechanic and the used materials all fall under the same low tariff. Because it is not always that the combinations fall under the same tariff, it is advisable to present your own situation to the Tax Authorities or your own financial advisor.

0% tariff

In conclusion, there are also a number of situations for which you do not have to charge any VAT. Under this so-called 0% tariff fall, for example, various international transactions and international passenger transport. The VAT can, under certain conditions, be   shifted**. You can also, as a small entrepreneur be   exempt   from having to do VAT-administration.

Would you like to know more?

Read more about   the Dutch tax system   in English at Lexlupa. Or visit the   Tax Authorities* website to learn more about the different VAT-tariffs.

In this article you will find the following subjects, concerning the 2022 Dutch taxes, according to the law tax plan 2022. At this point, this is not yet a definitive legislation. This overview of the tax plan 2022 includes some fiscal Corona regulations that are a continuation of measures taken earlier and have been included in the same legislation.

1. Income tax tariff and deductions
2. Decreasing independent deduction within 16 years
3. Wage taxes: training costs old employees
4. Corona measures
5. Partnership taxes
6. Stock options
7. Tax obligations joint ventures

1.      Income tax tariff and deductions 2022

Tax brackets and tariffs
The income tax has two brackets currently. The first brackets is taxed with a tariff of 37,07% and the second bracket, starting at an income of €69.398 has a tariff of 49,5%.

For seniors the first bracket tariff is 19.2%. From €35.000 on, the tariff is 37,1%. From €68.507, there is a third bracket, with a tariff of 49,5%.

Deductions

Deduction tariff max 40% in 2022
The deduction tariff has a maximum of 40% for a number of deductibles. In 2021 this was 43%. In 2023 it will be 37,07%. Below you find a list of deductibles under this restriction.

Entrepreneurs
SME profit exemption, deduction research and development, cooperation deduction, self-employed persons deduction, starters deduction with incapacity for work, strike deduction and the posting exemption.

All taxpayers
Mortgage interest deduction, alimony deduction, gifts deduction, weekend expenses for handicapped children and deduction of specific healthcare expenses.

Education deduction in the income tax
As of 2022, costs for schooling and education are no longer deductible in the oncome tax. From March 1st on, you can instead apply for STAP budget for compensation of schooling costs at the UWV.

For entrepreneurs, different rules apply; education costs made for business purposes are deductible from the profit.    

General tax deductions
The general tax deduction will increase with €51 to €2.888. You will receive the maximum amount of tax deduction with €21.318 in income and decreases if you have more income. The deduction is zero with an income of €69.399. For persons with a state pension (AOW), the maximum of deduction as of 1 January, 2022 is €1.494.

Labour deduction
The labour deduction increases with €55 to €4.260. You will receive the maximum labour deduction with an income of €36.360. The deduction is zero with an income of €109.347. For persons with a state pension (AOW), the maximum of the deduction as of 1 Januari, 2022 is €2.204.

Combination deduction (IACK = inkomensafhankelijke combinatiekorting: Income dependent combination discount)
This is a discount for everyone with children below the age of twelve and who works. The maximum amount in 2022 is €2.534 and ranges from zero with an income of €5.220 up to the maximum with an income of €27.350.

Senior deduction
The senior deduction increases to €1.726. The decrease of the deduction above an income of €38.465 will gradually go up to zero with an income of €49.324.

Payout tax credit
When the tax credits are not, or not entirely, cashed in by the partner earning the least, this is paid out to that partner. Provided that the partner earning the most has paid their taxes in full. When you meet these requirements, the right is dependent of your age. Are you born before 1963? Then you are entitled to the complete tax credit of €2.888. When you are born after 1963 than the amount is much lower; €193 to be precise (in 2021 this was €379).

Adjustment Box 3
The tax-free capital will be raised in 2022 to €50.650. The tax rate remains 31%. The deduction for Green Investments (Groen beleggen) is 0,7% of the exemption. (Without fiscal partner this is €61.215. When one does have a tax partner, the exemption is €122.430).

2. Reduction independent deduction in 14 years

The independent deduction is €6.670 in 2020, but will decrease with €360 in 2022 to €6.310 and will gradually decrease over the next 14 years to €3.240 in 2036.

3. Wage taxes

Targeted exemption for working from home
Employees that are working from their homes for a (part of the) day, may receive a tax free compensation from their employer of €2 a day.

Targeted exemption for training costs
When an employer compensates training costs of an (former) employee, than this is free of tax. As of 1 March 2022, it is possible to apply for STAP budget – a subsidy for education costs- at the UWV (the Dutch Employee Insurance Agency). The exchange of gross wage to training costs is also allowed.

4. Corona tax measures

Income that is derived from TLV and the TONK measure, is not taxed for the income tax or the corporate tax. Compensations from the NOW regulation do get taxed though.

5. Corporate tax

Adjustment rate
The corporate tax rate will remain 15% in 2022. Anything above the bracket threshold of €395.000 will be taxed at a rate of 25,8%. See the table below:

Significant importance (aanmerkelijk belang) – BOX 2
When significant importance is the case, then the tariff in Box 2 will remain the same as in 2021, 26,9%.

Approach informal capital structures
Starting in 2022 it is no longer possible to deduct expenses from profit in the Netherlands when the other party will not pay enough taxes abroad on the income/benefit balance within corporations. 

Innovation box
The rate remains the same as in 2021 when it comes to income in the innovation box. The rate in 2022 will be 9%. Before 2021 this was 7%.

Return dividend- and gambling tax
As of 2022 it is no longer possible to receive a return of formerly payed dividend- and gambling tax. This was allowed until 2021 when the profit of a company was zero. As off 2022 it is possible though, to settle gambling taxes with future profits.

6. Stock options

At this moment (December 2021) there are plans to change the moment of the raising of tax (wage taxes) to a later moment. A stock option entails the right to buy a share at a later moment at the payment of an earlier determined price. At the exercise of this right (which is the buying of stocks), there is payment of wages. But when the stocks cannot be sold (f.e. in case of a lockup; a duty to maintain the stocks) , the amount must be financed with own resources. For certain organisations, this might be problematic. The aim is to change the moment of raising tax from the moment of buying of the stocks, to the moment of selling. The expectations are that in 2022 a legislative proposal for this change will be done.

7. Tax obligation collaborations

 As of 2022, hybrid enterprises that are based in the Netherlands, will be obliged to do tax declarations. The goal is to prevent hybrid mismatches that might lead to not paying taxes.

In this article we will go over the box 3 taxes, the equity capital base for the allowances, and we have a few tips to save in box 3. 

Box 3 capital

First, what exactly are we talking about? You will have to pay taxes over the interest of your capital. The interest is fictitious and is determined by the legislator. You do not pay taxes over the capital part, but you do pay taxes on anything added to that capital. Until 2017, the fictitious interest was always 4% and from 2017 there are different interest rates. The higher your capital the higher the fictitious interest, the higher…. Well, you get it. 

The graduated scale for 2021. (reference date January 1st, 2021 per adult):

• That is 0,00% for capital up to 50.000 euro (tax-free capital)
• That is 1,9% for capital between 50.000 and 100.000 euro
• That is 4,5% for capital between 10.000 and 1 million
• That is 5,69% for capital above 1 million euro 

The tax rate for the fictitious interest is 31%. 

Equity capital base allowances 

Except the healthcare and childcare allowances, the allowances all have an equity capital base. Your entitlement to the allowance is dependent on this equity capital base. When you are above that base, you are not entitled to that specific allowance. 

Capital limit 2021 (reference date: January 1st 2021) allowances

*Pay attention: if you have co-inhabitants, then per co-inhabitant €31.340,- capital more. 

Save on taxes Box 3

Below 11 tips to save tax. These are meant for when you have capital above €50.000.

Four easy tips

You will have to pay taxes over your capital. The Tax Authorities will look at your balance on January 1st 2021. So the lower your balance, the less you pay taxes. 

Tip 1: Spend money before the end of the year: purchase that car, jacket or holiday trip

Tip 2: Withdraw cash before the end of the year: You are allowed to have €534 in cash per person

Tip 3: Relieve your debts: pay small debts. For example: part of your college debt, tax assessment or credit card

Tip 4: Gifts: Make a donation or gift to a charity

Three more tips: Easy, but pay attention!

Tip 5: Relieve your debts: pay off the mortgage of your (main) residence.

Pay attention: there may be a penalty for relieving your mortgage debt early, check this with your bank.

Tip 6: Make a donation

Pay attention:  You can donate up to €2.208 to anyone, tax-free. When you donate more, you should check what the law says and do not donate money to your children that are minors. 

Tip 7: Pay ahead: health care premiums, interest, tax assessments etc. 

Pay attention: You will need to follow up or you will make undue payments

The last four Tips: Tricky tips for when December has arrived

Tip 8: Sell your house after January 1st 2021. When you sell your house in December, the overvaluation will be added to your capital and included in the taxes in Box 3. 

Tip 9: Do not rent out your own home: When you rent out your house before January 1st 2021, the home you are renting out is included in Box 3 for tax purposes. 

Tip 10: Officially commit to a relationship: marry or sign a registered partnership with someone with no or little capital. This way you increase your tax-free capital. 

Tip 11: Invest in a green fund. The government has designated certain funds with a tax benefit. Pay attention though; there are limits to the exemptions and the capital will be included for the purpose of the equity capital base for allowances. You will also need to make sure you do this in time. 

These are the designated funds: 

- ABN AMRO Groenbank bv

- ASN Groenprojectenfonds

- Regionaal Duurzaam 1

- Stichting Groenfonds

- Stichting NOTS RE Investments

- Triodos Groenfonds nv

- Groenwoningen Fonds

https://download.belastingdienst.nl/belastingdienst/docs/overzicht_fonds_belegging_belastingvoordeel_ib2001z2pl.pdf

In this article we will go over the following topics in regard to the 2021 taxes, according to the law tax plan 2021. At this point, this is not yet a definitive legislation. Furthermore, we will go over some Corona measures that are a continuation of measures taken in 2020 and have been included in the same legislation. 

1. Income tax tariff and deductions

2. Decreasing independent deduction within 16 years

3. Wage taxes: training costs old employees

4. Corona measures

5. Partnership taxes

6. Job orientated investment discount (BIK)

Appendix: Corona measures and overview duration (status 1 december 2020)

1. Income tax tariff and deductions 2021

Tax brackets and tariffs 

The income tax has two brackets currently. The first brackets is taxed with a tariff of 37,1% and the second bracket, starting at an income of €68.507 has a tariff of 49,5%. 

For seniors the first bracket tariff is 19.2%, from €35.000 the tariff is 37,1% and from €68.507, there is a third bracket, with a tariff of 49,5%.

Deductions

General tax deductions

The general tax deduction will increase with €126 to €2.837. You will receive the maximum amount of tax deduction with €21.043 in income and decreases if you have more income. The deduction is zero with an income of €68.507. 

Labour deduction 

The labour deduction increases with €386 to €4.205. You will receive the maximum labour deduction with an income of €35.000. The deduction is zero with an income of €110.000. 

Combination deduction (IACK = inkomensafhankelijke combinatiekorting*)

*Income dependent combination discount 

This is a discount for everyone with children below the age of twelve and who works. The maximum amount is €2.815 and ranges from zero with an income of €5.153 up to the maximum with an income of €30.000. 

Senior deduction 

The senior deduction increases to €1.703. The decrease of the deduction above an income of €37.970 will gradually go up to zero with an income of €50.000. 

Payout tax credit

When the tax credits are not, or not entirely, cashed in by the partner earning the least this is paid out to that partner. Provided that the partner earning the most has paid their taxes in full. When you meet these requirements, the right is dependent of your age. Are you born before 1963? Then you are entitled to the complete tax credit of €2.837. When you are born after 1963 than the amount is much lower; €379 to be precise. 

Adjustment Box 3

The tax-free capital will be raided to €50.000 in 2021. Pay attention though; the tax rate will go from 30% to 31%. Read more about that in this article. 

2. Reduction independent deduction in 16 years

The independent deduction is €7.030 in 2020, but will decrease with €360 in 2021 to €6.670 and will gradually decrease over the next 16 years to €3.240 in 2036. 

3.  Wage taxes

When the employer pays for training expenses of an employee, then they will not have to pay taxes over those expenses. Now, that also applies to ex-employees. 

4. Corona measures

Many measures are probably already outdated when this article is published. The appendix will have the complete list of all current measures. However, we will focus on a few key topics in the following paragraphs. The hourly criteria for the independent deduction for the period of March 1st until October 1st has been arranged that you will have worked an average of 24 hours a week, even if in reality you have worked less in this period. For those unable to work due to a disability those hours have been set to 16 hours a week. The income from TOGS (compensation for Covid-19 damages) and TVL (compensation fixed expenses) are not taxed in the income or partnership taxes. You will also receive VAT-exemption for outsourcing healthcare staff. 

5. Partnership tax

Adjustment rate

The partnership tax rate will be reduced from 16,5% to 15% in 2021. Anything above the bracket threshold of €245.000 will be taxed at a rate of 25%. See the table below. 

Adjustment loss relief

The loss relief will change to unlimited in the future and one year in the past. This used to one year in the past and six years in the future. However, the flexibility is dependent on the amount of profit, the profit up to €1milion can be used to settle this in its entirety. However, profit exceeding €1milion can only be used for 50% when settling losses. 

Approach informal capital structures

Starting in 2022 it is no longer possible to deduct expenses from profit in the Netherlands when the other party will not pay enough taxes abroad on the income/benefit balance within corporations. 

Innovation box 

The lowered rate will increase when it comes to income in the innovation box. The rate in 2021 will be 9%, in 2020 this was 7%. 

6. Job orientated investment discount (BIK)

Companies that make an investment in 2021 and 2022 will receive a investment deduction. That deduction can be settled with the wage taxes that need to be paid. The deduction is 3,9% for investments up to €5.000.000. Any investments above that amount will receive a 1,8% deduction. 

Appendix: corona measures and overview duration

To help entrepreneurs as well as possible during the corona crisis, several tax measures have temporarily been eased. A large part of these adjustments will continue up to the first of October 2020. The consequences of the coronavirus will not, however, have been solved. Therefore, parliament has decided to extend a few measures. These measures are necessary in the current 1.5 meter society we live in. The parliament will also make statutory provisions of some of these measures in the Tax Plan 2021. For example the net healthcare bonus. By doing so, the entrepreneurs have a legal base for, among other thins, administration and future tax declarations. 

Note: Per december 14 the Netherlands went into a lock down. It means that som of the below measures will be extended. Like the deferral of payment of tax and when to start paying back the owed tax.

*This measures has been recorded in the Tax Plan 2021

*Income dependent combination discount 

In July 2019 after an investigation, a decision was made that the current BTW (VAT)-number for self-employed professionals and sole proprietorships are a risk regarding identity fraud. The current BTW-number contains the BSN (social security) number of the entrepreneur. The BSN number is a personal identification number that mainly serves as a reference between citizen and government. Because of the strict GDPR regulation, secretary of state Snel decided that an alternative must be found.

That alternative has now been found. Entrepreneurs will receive their new BTW-number in the autumn of 2019.

Implementation January 1st, 2019

The new BTW-id is a response to the European GDPR legislation that has gone into force in 2018. The GDPR has as its main purpose the better protection of European citizens with one overarching European legislation. The Dutch Authority of Personal Information (AP) has decided that a BSN-number that has to be made public on the invoices of certain entrepreneurs does not comply with the GDPR-legislation.

 Secretary of State Snel launched an investigation in July 2019 in search of other alternatives. In October it was made public that the new alternative would no longer contain the BSN-number of the entrepreneur. In the autumn of 2019 entrepreneurs will receive a letter with their new BTW-id. They will need to apply this new BTW-id from the 1st of January 2020 on their invoices and administration. The BTW-number for referral with the Tax Authorities will remain the same as well as the BTW-number used for tax declarations.

BTW-id replaces the BTW-number on the sales invoice

The new BTW-id will no longer contain the BSN-number of the entrepreneur. A different, random, 9-digit verification number will be its replacement. This new ruling will only apply to entrepreneurs with a sole proprietorship. This is because they are the group that currently have a BTW-number with their BSN-number. This ruling is not applicable, therefore, for entrepreneurs with a B.V or VOF.

A self-employed professional or a sole proprietor will need to make some changes in their administration. The invoicing will need to be adjusted with the new BTW-id and also on their website the correct, new, number will need to be used.

For whom is this important?

It is the responsibility of the entrepreneur to adjust their administration so all the invoices will contain the new BTW-id starting January 2020. Suppliers that the entrepreneur in question uses will also need to change their invoicing with the new number and use for the declaration intra-community performances. (ICP).

Pay attention: if the entrepreneur receives an invoice from the supplier in 2020, originating from 2019 with the old BTW-number, then no new invoices will need to be requested with the new BTW-id number.

A summary

What?

A new BTW-number called the BTW-id without the BSN-number of the entrepreneur. With the purpose of replacing the BTW-number on the invoice.

For whom?

Currently the BTW-number of a sole proprietor or self-employed professional contains their BSN-number (social security). They will receive a new BTW-id.

When?

You will receive your BTW-id in the autumn of 2019 and will go into force January 1st, 2020.

What do I need to do?

You will need to adjust your invoicing and administration accordingly.

What should I give to Lupacompany?

You will only need to give your new BTW-id number to us. You will need to change the old BTW-number into the new BTW-id number.

Does this also apply to my payroll tax number?

No, the payroll tax number will not change because it does need to be on your invoices.

What do I use the BTW-number for?

The BTW-number, with your BSN-number, is used for your BTW-return. Your current BTW-number will be called revenue tax number (omzetbelasting(aangifte)nummer). This will also be the number you use when communicating to the Tax Authorities.

What should I do with my suppliers?

Check your invoices and make sure the BTW-id is added accordingly. This number is very important in construction and for performances to/from other EU-countries.

Make sure other parties are aware of your adjusted number.

Other EU-countries are not aware of this change. However, if they do not change it on their reporting, it can lead to problems.

What will that number look like?

Your BTW-id consist of a total of 14 characters. Namely the country code ‘NL’, 9 numbers, the letter ‘B’ and a verification number. Example of the new number: NL000099998B57.