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Changes in Dutch tax 2024 for companies and individuals

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Comprehensive Introduction to the 2024 Tax Changes – An In-Depth Analysis

Major changes are planned in Dutch tax legislation in 2024. These adjustments are crucial for both private individuals and companies. Below is an even more comprehensive overview of the most significant changes, delving deeper into the background, possible consequences and broader context of these changes.

Increased Rates in Box 2 (substantial interest holding) and Box 3 (equity tax)

Box 2: The increase in the rate in box 2 to 33% for income above € 67,000 is a significant change for shareholders with a substantial interest. This change may lead to a reconsideration of dividend strategies and the timing of distributions. It is crucial for shareholders to review their tax planning in light of this change, especially given the potential impact on the net income and cash flow of their companies. This change may also impact decisions on corporate investment and restructuring.

Box 3: The increase in the rate in box 3 to 36% is a direct response to the long-standing discussion about the fairness of taxation on fictitious returns. This increase could have a significant impact on the net returns of savers and investors. It is advisable for taxpayers to reconsider their investment portfolios, especially in light of the new focus on actual returns. This could lead to a shift in investment strategies, placing more emphasis on wealth preservation and efficient tax planning.

SME profit exemption and IACK: What does this mean for Entrepreneurs and Families?

The adjustment of the SME profit exemption to 13.31% is a welcome relief for small and medium-sized businesses. This change can help reduce the tax burden on smaller businesses and encourage them to continue investing and growing. However, it is important that SMEs are aware of this change and adjust their tax strategies accordingly to take full advantage of the new regulations.

The postponed abolition and phase-out of the IACK until 2027 gives families more time to adapt. It is important for working parents to understand how this phase-out will impact their net income and adjust their financial planning accordingly. These changes could especially impact families with a single income or where one parent works part-time.

The Impact of the Retrenchment of the 30% Scheme and the Lowered Threshold for Excessive Borrowing

The reduction of the 30% ruling may have consequences for the attractiveness of the Netherlands as a work location for international talent. Companies that rely on expats may need to revise their compensation packages to accommodate these changes. This could lead to a reassessment of overall compensation strategies and possibly even a reconsideration of the use of international staff.

At the same time, lowering the threshold for excessive borrowing to €500,000 requires attention from directors and shareholders. It is crucial to reconsider the structure of personal and business finances to avoid unwanted tax consequences. This change could have significant implications for the company’s liquidity planning and overall financial strategy.

Energy Tax and Excise Tax Rebates: Direct Impact on Households

The reduction of energy taxes and the extension of excise duty discounts are measures that provide direct relief to households. These changes can help offset rising costs of living, especially at a time when energy prices are volatile. It is important for consumers to understand how these changes may affect their monthly expenses and to adjust their budgets accordingly.

Conclusion

The tax changes for 2024 are diverse and have a broad impact. They touch on various aspects of tax practice, from personal income tax to corporate taxes. It is essential that both individuals and companies are aware of these changes and prepare for them. A proactive approach and timely planning are crucial to optimally navigate the new tax landscape.

Article 23 VAT permit for a cash flow advantage with import

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Article 23 Permit: Liquidity Advantage for Importers

When importing goods from countries outside the European Union, in addition to customs duties, VAT is also payable on import. The VAT payable on import and any customs duties must be paid to Customs when the so-called import declaration is submitted. The VAT paid on import can be claimed back as input tax at a later date through the regular VAT return (if you are entitled to deduct VAT). This means that this VAT is actually paid in advance and is only received back at a later date. This creates a liquidity disadvantage. An Article 23 license can help to solve this problem.

What is an Article 23 license?

With an issued Article 23 permit, it is possible to defer the payment of VAT payable on import to the time of the VAT return. If you are entitled to deduct VAT, this VAT can be deducted immediately in the same return as input tax. This means that you do not have to pay any VAT in advance. This is of interest, among other things, for entrepreneurs who regularly import goods from countries outside the European Union. The license must be applied for in writing.

Conditions

There are a number of conditions that must be met in order to be eligible for an Article 23 license:

  • You must be resident in or established in the Netherlands;
  • You must regularly import goods from countries outside the European Union;
  • You must maintain a separate administration from which it is easy to determine how much VAT you must pay on import.

If you do not meet the first condition, it does not mean that you cannot obtain a license. As a foreign entrepreneur, you can also apply for an Article 23 license through a tax representative.

Liquidity advantage

An Article 23 license can provide a liquidity advantage for entrepreneurs who import goods from countries outside the European Union. The entrepreneur does not have to pay the VAT on import in advance, but can instead deduct it in the VAT return. This means that the entrepreneur only has to pay the VAT when he sells the goods.

Processing in the VAT return

If an entrepreneur has an issued Article 23 license, the VAT payable on import can be declared in the regular VAT return under item 4a (purchases from countries outside the EU). The VAT payable, as stated in item 4a, can then be deducted again in item 5b (input tax). Of course, this only applies if you are generally entitled to deduct input tax.

Applying for an Article 23 license

The application for an Article 23 license can be submitted in writing to the tax office. The application must contain the following information:

  • Company name
  • VAT number
  • Type of goods
  • Value of the goods
  • Frequency of import
  • Countries of origin

The Tax Authorities will assess the application within eight weeks.

Fiscal Substance

From experience, we know that obtaining a VAT number can be difficult for foreign entrepreneurs. In principle, it is only possible to obtain a VAT number if you are a Dutch entrepreneur or have a Dutch fiscal representative. However, we have previously managed to secure a VAT number for foreign entrepreneurs without a fiscal representative. Would you like to know more about what we can do for you? Click on the contact form at the bottom of this article.

Conclusion

An Article 23 license can be an interesting option for entrepreneurs who regularly import goods from countries outside the European Union. The license can provide a liquidity advantage, as the entrepreneur does not have to pay the VAT on import in advance.

Do you need help applying for an Article 23? Contact TaxAble

 

Developments in the Excessive Borrowing from your own BV

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Developments in the Excessive Borrowing from Your Own BV Act: A Comprehensive Guide for Medium and Small Businesses

Introduction

The fiscal world is constantly evolving, and the recent introduction of the Excessive Borrowing from Your Own BV Act is a crucial development that affects directors-major shareholders (DGA’s) and their businesses. This law, intended to counteract tax deferral through borrowing from one’s own BV, has significant implications, especially for medium and small businesses. This article provides an in-depth overview of the law, its impact, and practical solutions to manage the consequences.

The Essence of the Law

From 2023, borrowing more than €700,000 from your own BV will be taxed as income from a substantial interest (box 2), as outlined by the Tax and Customs Administration. This threshold is crucial; loans above this amount are seen as a disguised form of dividend distribution and thus taxable. Importantly, debts for one’s own home are excluded, provided certain conditions are met.

This regulation was introduced in response to the practice where DGA’s borrow significant amounts from their own companies, often without concrete repayment plans. This leads to deferred tax collection, which the government aims to address with this law. The law’s goal is to revise the fiscal treatment of such loans and ensure a fairer and more transparent tax system.

Who Is Affected?

The regulation affects substantial interest holders and their partners. This includes anyone with an interest of 5% or more in a company. It is important to emphasize that not only the loans of the DGA themselves count, but also those of their fiscal partner and connected persons. Connected persons are, for example, children or parents who themselves do not have a substantial interest in the company but do have a substantial debt to the company.

This means that the financial activities of an entire family can be influenced by this legislation. It is therefore crucial for DGA’s and their family members to carefully assess and plan their financial situation in light of these new rules.

Practical Implications

The introduction of this law has direct consequences for the financial planning of DGA’s. It requires a reconsideration of how they and their family members borrow money from their companies. One of the most obvious consequences is the need to review existing loans and, if necessary, reduce them to stay below the €700,000 threshold.

This review can be a challenge, especially for those who have borrowed significant amounts for personal expenses or investments. It may be necessary to find alternative sources of financing or liquidate assets to reduce the debt burden. This process requires careful planning and consultation with tax advisors to ensure compliance with the new requirements without unnecessary financial stress.

Strategies and Solutions

  1. Debt Repayment: The most direct way to comply with the law is by repaying debts. This can be done by using liquid assets privately or by selling assets. Repaying debts not only reduces the tax burden but also improves the financial health of both personal and business finances.
  2. Dividend Distribution: Another strategy is to distribute dividends to reduce the debt. This can offer a dual benefit: it reduces the debt and provides a legitimate way to extract money from the business. However, with the split rates in box 2 from 2024, one must consider the fiscal consequences of this choice.
  3. Refinancing: Debts can also be refinanced with external parties, such as banks. However, this can have implications for taxation in box 3. Refinancing can be a good option for DGA’s who want to restructure their debts under potentially more favorable conditions.
  4. Avoiding Fiscal Partnership: By avoiding fiscal partnership, the threshold can effectively be doubled, which can be an interesting option for some DGA’s. However, this requires careful consideration of the broader fiscal and personal consequences.
  5. Transferring Assets: Transferring assets to the BV can also be a way to reduce the debt. This can be particularly useful for DGA’s who have personal assets that can be converted into business capital.

Future Changes and Points of Attention

An important future change is the planned reduction of the threshold to €500,000 in 2024. This requires extra attention and possible adjustments in the financial planning of DGA’s. It is crucial to keep an eye on these changes and proactively plan for the future.

Additionally, there is criticism of the complexity and potential inaccuracies of the law, suggesting that further adjustments or clarifications may be possible in the future. DGA’s and their advisors must remain alert to any changes in legislation and the associated fiscal guidelines.

The Importance of Expert Advice

Given the complexity of the law and the potential impact on personal and business finances, it is advisable to seek expert fiscal and financial advice. A tax advisor can help navigate the nuances of the law, provide tailored solutions, and plan for future changes.

Conclusion

The Excessive Borrowing from Your Own BV Act requires a careful reconsideration of the financial strategies of DGA’s. By acting proactively and implementing the right strategies, DGA’s and their businesses can adapt to this new fiscal reality. It is essential to collaborate with an expert tax advisor to determine the best approach for your specific situation. Looking to connect with a knowledgeable advisor? Click here.

 

Deposit annual accounts with Dutch Chamber of Commerce

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According to Title 9, Book 2 of Dutch civil code, every Dutch private or public limited company must prepare and deposit annual accounts with the Dutch Chamber of Commerce.

Deadline to deposit the annual accounts with the Chamber of Commerce
A company must file its annual accounts on time. The annual accounts must be deposited with the Chamber of Commerce within eight days after adopting the annual accounts in a shareholder’s resolution. The deadline for depositing the annual accounts depends on the legal structure of your business, but at the most this is within 12 months from the end of the financial year. We have the required software and certificates to assist with depositing of annual accounts with the Chamber of Commerce, we can also prepare the shareholder’s resolution.

We can assist with depositing annual accounts at the Chamber of Commerce

Required details of the deposited annual accounts
The annual reporting regulations offer exemptions with regard to the details and content of the annual accounts and the filing thereof. If and which exemption applies to a limited depends on the size of the company.

The four different sizes are micro, small, medium and large. At a minimum the balance sheet is to be deposited for a micro size company, from there the required details only increase per following size. In the table down below you can see which criteria will need to be met. A company falls into a certain category if it meets at least two of the three criteria in the table during two consecutive years.

€                                                            Micro                    Small                     Medium size                     Big

Assets                                                 ≤350.000             ≤6.000.000          ≤20.000.000                       >20.000.000

Net revenue                                     ≤700.000             ≤12.000.000       ≤40.000.000                       >40.000.000

Number of employees                 <10                        <50                        <250                                     ≥250

(< = less than, ≤ = less than or equal to,  > = more than, ≥ = more than or equal to)

An example of micro to small:
A company has assets on the balance sheet for an amount of €200.000 (micro), a net revenue of 5 million (small) and 5 employees (micro) in the years 2019 and 2020. The company therefore qualifies as micro as it meets two of the three criteria for two consecutive years.

In 2021 the company has assets on the balance sheet for amount of € 500.000 (small), a net revenue of 5 million (small) and 5 employees (micro). In this case the company meets two of the three criteria for a small company. However, the criteria for a small company has not yet been met for two consecutive years. Therefore 2021 will be considered a transition year and the company will remain micro in the year 2021. In 2022 if the company publishes figures that are considered small then that means that from then on the company will be considered small because now it has met two of the three criteria for two consecutive years.

Being considered micro, small, medium or large has consequences for the way companies have to detail their annual accounts and the filing thereof. Do you want to know which exemptions with regarding the organization of the annual accounts apply to your Limited? Don’t hesitate to contact us! We are happy to help. We offer a one stop shop for tax, accountancy and legal services.

Make use of the One Stop Shop to avoid having to register VAT per country

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Make use of the One Stop Shop to avoid having to register VAT per country 

As of 1 July 2021, the rules for distance selling (B2C) changed. The foreign VAT will have to be charged by the entrepreneur to the consumer according to the VAT rules of the country where the consumer is located. Instead of reporting in every EU country where the consumer is located, it is now possible for the supplier to make use of the One Stop Shop (OSS) scheme. The supplier needs to register in a single EU country and can use this opportunity to account for VAT in all EU countries where the consumers are located. This is a major advantage as it significantly reduces administration costs.

There are three variants of the OSS available: 1. The Union scheme 2. The non-Union scheme and 3. The Import Scheme (IOSS) for distance sales under €150. As an entrepreneur outside the EU, it is also possible to make use of the OSS. In principle, the choice of country is free, but if the company has a permanent establishment in the EU, the OSS must be applied for in the country in which the permanent establishment is located. For the non-EU entrepreneur, it may be more advantageous not to register for the OSS if the entrepreneur expects to incur costs on which foreign VAT is charged to him.

The services that qualify for the OSS are: digital services, services that are taxed based on the legislation of the country of the consumers and services that take place in that country. Examples are intra-community distance sales (sales to consumers where the goods are sent from one EU Member State to another) and online services (such as subscription-based platforms).

For EU entrepreneurs, there is a cumulative threshold of €10,000 per year; one entrepreneur meets this threshold if, for example, €5,000 in digital services and €5,000 in intra-Community distance sales have been converted.

There is no threshold for non-EU entrepreneurs; they can always apply for the OSS. If, for example, sales are made from an EU country via a permanent establishment, the €10,000 threshold must again be met and may not be included in the non-EU company’s OSS declaration.

Would you like to make use of the OSS, then TaxAble can assist you! We can assist with amongst others:

  • Registration for the OSS with the Dutch tax authorities;
  • Making quarterly reports for the VAT;
  • Submitting the quarterly reports for the VAT;
  • Take over complete correspondence with the tax authorities.

Personal income tax returns can be filed going back five years

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Personal income tax returns can be filed going back five years. Have you received an invitation to file a personal income tax return? In that case you are obligated to timely file such personal income tax return.

If you did not receive such an invitation, but do you have to pay an amount on personal income tax of  € 46 or more (up to and including 2017) or € 47 or more (from 2018)? In that case you are obligated to request the tax office to receive a personal income tax return.

You can also request a personal income tax return in case you are entitled to an amount of € 15 or more on refund. In the table below you can see when your declaration must reach the tax office at the latest.

Year 2018:
Declaration must be received by: December 31, 2023

Year 2017:
Declaration must be received by: December 31, 2022

Year 2016:
Declaration must be received by: December 31, 2021

Year 2015:
Declaration must be received by: December 31, 2020

Year 2014:
Declaration must be received by: December 31, 2019

We can assist with timely filing of your personal income tax return.