You are here: Home / Archives for All Articles / News on Business Tax

Proposed changes Dutch income tax rates 2021 and further

by

Proposed changes Dutch income tax rates 2021 and further

Income tax (box 1)
As per January 1st 2020, a two-bracket system was introduced for the personal income tax. The lowest tax bracket (up to an income of EUR 68.507) is taxed against a rate of 37,35%. The highest bracket (for an income exceeding EUR 68.507) is taxed against a rate of 49,50%. These tax rates apply for the fiscal year 2020.

The Government has announced that they will reduce the tax rate in the lowest bracket in stages. The tax rate in the highest bracket will remain 49,50%:

  2020 2021 2022 2023 2024
Bracket 1 37,35% 37,10% 37,07% 37,05% 37,03%
Bracket 2 49,50% 49,50% 49,50% 49,50% 49,50%

 

People entitled to an AOW pension do not pay any AOW premium. For that reason, the three-bracket system still applies to them:

 

  2020 2021 2022 2023 2024
Bracket 1 19,45% 19,20% 19,17% 19,15% 19,13%
Bracket 2 37,35% 37,10% 37,07% 37,05% 37,03%
Bracket 3 49,50% 49,50% 49,50% 49,50% 49,50%

 

Tax credits

  • As per 2021, the general tax credit (algemene heffingskorting) will be increased from EUR 2.711 to a maximum of EUR 2.837. This tax credit is income related;
  • As per 2021, the employed person’s tax credit (arbeidskorting) will be increased from EUR 3.819 to a maximum of EUR 4.205. This tax credit is income related;
  • As per 2021, the elderly person’s tax credit (ouderenkorting) will be increased from EUR 1.622 to a maximum of EUR 1.703;
  • As per 2021, the single elderly person’s tax credit (alleenstaande ouderenkorting) will be increased from EUR 436 to EUR 443;

 

Self-employed deduction

Last year, the Government already announced the phasing out of the self-employed deduction. This phasing out will be accelerated as from 2021. The current self-employed deduction of EUR 7.030 will be reduced with EUR 360 every year until 2027, after which the reduction will be EUR 110 every year until EUR 3.240 in 2036.

Income tax (box 3 = equity tax)

A legislative proposal has been submitted to increase the tax-free threshold in the context of the investment yield tax (box 3). The tax-free threshold previously was EUR 30.846 (2020), and will be EUR 50.000 in 2021. For fiscal partners this is EUR 100.000.

In order to be able to finance this higher tax-free threshold, the applicable tax rate in box 3 will be increased from 30% (2020) to 31% in 2021.

Because the tax rate of 31% is being calculated on a notional yield (and not on the actual realized yield), the effective tax burden in box 3 will be as follows:

 

Assets for an amount of to Effective tax burden
0 50.000 0
50.000 100.000 0,59%
100.000 1.000.000 1,40%
> 1.000.000   1,76%

 

Corporate income tax

Last year, the Government announced that the corporate income tax return would be lowered from 16,5% to 15% (low rate), and from 25% to 21,7% (high rate). These plans have slightly changed. As from 2021 the high rate will remain 25%. Also the bracket limits are changing:

 

  2020 2021 2022
Tax rate bracket 1 16,5% 15% 15%
Tax rate bracket 2 25% 25% 25%
Bracket limit EUR 200.000 EUR 245.000 EUR 395.000

 

Temporary interest measures tax authorities because of Covid-19

by

Temporary reduction of collection interest and tax interest

If you do not pay an assessment on time, you normally have to pay 4% recovery interest from the moment the payment term has expired. As of March 23, 2020, the tax authorities will temporarily reduce the collection interest from 4% to 0.01%. This applies to all tax debts.

The tax office charges tax interest if a tax return was not filed on time or was filed for an incorrect amount. The tax interest rate is 8% for corporate tax and 4% for other taxes. The tax office will also temporarily lower the tax interest rate to 0.01%.

This temporary measure will apply to all taxes subject to tax interest. The temporary reduction of the tax rate will take effect from 1 June 2020, except for income tax. For the income tax, the reduction will take effect from 1 July 2020.

The end date of the tax interest lowering is set on October 1st 2020. The interest will then increase back to 4%. Also the tax interest for the corporate income tax will increase to 4% instead of the previously applicable 8%, the 4% for corporate income tax will remain till the end of the year 2021. 

If you need any assistance with your tax return, we have been assisting both companies and private individuals for many years.

Fixed travel reimbursement during the Corona crisis

by

Fixed travel reimbursement during the Corona crisis. As an employer, you can choose to reimburse your employees 0.19 cents per kilometer that is actually driven. If an employee works from home, and so no kilometers are made, this tax-free allowance does not apply. However, in most cases there has been agreed upon a fixed monthly travel reimbursement.… Read More

Compensation for wage costs during the corona crisis

by

Compensation for the wage costs (NOW) for Dutch companies during the corona crisis. During the corona crisis, the cabinet wants to protect people’s jobs and incomes. Therefore, an economic emergency package was announced by the Dutch Government on March 17. One of the measures is a compensation for the wage costs for companies that are now losing turnover, this compensation is called: Temporary Bridging Emergency Action for Job Retention (NOW). UWV (Dutch Employee Insurance Agency) strives for companies to submit an application from April 6. Companies that meet the conditions can – upon their filed request thereto – expect an advance within two to four weeks.… Read More

New VAT exemption for small businesses as of 2020

by

Entrepreneurs with an annual turnover under € 20,000 may be exempt from paying VAT if they opt for the so called small businesses VAT scheme (“KOR”). In order to participate in this small businesses VAT scheme, an application is to be made with the Dutch tax office at least 4 weeks before the start of the oncoming VAT quarter.

If you are already exempt from paying VAT, your exemption will continue automatically. If you no longer require a VAT exemption or do not qualify for the new exemption rules, you must inform the Dutch tax office.

When applying the small businesses VAT scheme, such entrepreneurs with an VAT exemption no longer charge VAT to their clients. Also, when applying the exemption, such small businesses do not have to file a VAT return, meaning they do not have to pay VAT but can also not deduct VAT. In addition applying small businesses are exempted from keeping a VAT administration.

The exemption of not having to file VAT returns and keeping an administration only applies to goods and services provided within the Netherlands. Small businesses that apply the exemption, will have to continue the exemption for at least 3 years, unless the annual turnover exceeds €20,000. In case of exceeding the tax office must be notified.

New as of 2020 is that legal entities (e.g. the B.V.) are also eligible for the small businesses VAT scheme.

We can assist to check the pro’s and cons of this new VAT exemption and to apply for the new scheme. We can also assist your company with all required tax, legal and accountancy needs.

 

Annual indexation for 2020 minimum salary 30% ruling

by

Salary criterion –
A salary criterion is to be met to apply the 30% ruling, below is the annual indexation for the 2020 minimum salary to qualify for the 30% ruling. There are three qualifying salary groups:

1. Scientists do not have a salary minimum;

2. People below 30 years of age with a Masters education have a minimum salary requirement of EUR 29,149 (2020) / EUR 28,690 (2019) / EUR 28,350 (2018) excluding the 30% reimbursement and EUR 41,642 (2020) / EUR 40,985 (2019) / EUR 40,500 (2018) including the 30% reimbursement;

3. For Expats that do not match the groups under 1 and 2, a minimum salary requirement applies of EUR 38,347 (2020) / EUR 37,743 (2019) / EUR 37,296 (2018) excluding the 30% reimbursement and EUR 54,782 (2020) / EUR 53,918 (2019) / EUR 53,280 (2018) including the 30% reimbursement.

Please note that these minimum amounts are subject to annual indexation. In principle the salary criterion may not be decreased pro rata in case of a part time employment. There is an exemption on this rule in case of parental leave.

The salary criterion in principle replaces the prior criterion of required specific skills, in that sense the ruling has become more accessible. Please note however that the salary criterion is a continuous test, the employer is therefore held to continuously check whether all requirements are still met by its employee.

Here you can find full details on all criteria to be met in order to qualify for the 30%-ruling.

We can assist with the full process of obtaining the 30%-ruling, please contact us.