You are here: Home / Archives for All Articles / Other tax news

Changes in Dutch tax 2024 for companies and individuals

by

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.

Agreements Germany and Belgium home work days Covid-19

by

Dutch tax agreements with Germany and Belgium for days working from home due to Covid-19

The main rule for salary taxation is that employees are taxed in the county were they work. Because of Covid-19 people are working way more from home and this can bring unwanted double taxation and a higher income tax burden. Think of situations were usually you traveled a lot and worked often in the country were you get your salary from, this income is taxed there.

But now due to Covid-19 you have not travelled that much and most of your income will be taxable in The Netherlands, while the other country may also want to have a claim on part of your income.

To cope with these problems, additional agreements have been made by The Netherlands with Germany (6th April 2020 – at least 31st of March 2021) and Belgium (30th of April 2020 – at least 31st of March 2021)  regarding working from home.

In both cases the countries have agreed that cross-border workers may treat days worked from home as days were they would have normally (pre Covid-19) worked across the border, these days may be taxed by the other country.

If you require assistance with preparing your personal income tax return, please feel free to contact us.

 

Be aware of timely filing annual accounts at Chamber of Commerce

by

Be aware of timely filing of the annual accounts at Chamber of Commerce. 
Dutch legal entities such as BVs, NVs and cooperatives are required to file their annual accounts with the Dutch Chamber of Commerce (‘KVK‘) each year. These are the best known legal forms. But there are more legal forms with a requirement to file. Financial details of companies can be viewed by third parties and stakeholders by depositing. Depositing does not apply to sole traders.

We assist companies to deposit their annual accounts, we can assist with all company sizes.

A financial statement is a financial report of your company for the past year. Not or non timely depositing has consequences. Since September 2018, the law also imposes additional requirements on the information in the financial statements.

The basic principle is that you deposit the annual statement with KVK within 12 months after the end of a financial year. So the annual accounts for the year 2018 have to be filed before December 31st 2019. The management of the legal person is responsible for this. Has the financial statement been adopted? Then it must be at KVK within 8 days.

Adopting the annual financial statements is often quite a job. After drawing up by the management, the shareholders and possibly a supervisory board must also approve the annual accounts.

What is the timeline? The terms differ per legal person. If the financial year is the same as the calendar year, the following terms apply:

Within 5 months after the end of the financial year (no later than 31 May), the board prepares the annual financial statements and submits them to the shareholders. The shareholders grant the board a maximum of 5 months’ deferment for the preparation (31 October at the latest) in the event of special circumstances. The shareholders then have 2 months to adopt the financial statements. The final deposit date is therefore July 31 (5 + 2 months). With a maximum delay this is December 31 (5 + 5 + 2 months).

Exception to the rule
Are all shareholders also a director or supervisory director? Then the signing of the annual financial statement will immediately provide for this. Separate determination by the shareholders is not necessary. The extra 2 months expire. In this case, a BV will deposit on 8 June (5 months + 8 days) and no later than 8 November (5 months + 5 months + 8 days).

No timely determination
It is possible that the shareholders do not adopt the annual accounts in time. Not depositing is not an option. As the board of directors, you have a duty to file a provisional annual statement in such a case. This must be done within 7 months (31 July at the latest). With a maximum delay this is within 12 months (31 December at the latest).

No or late filing
Not depositing or not depositing on time has consequences. Within the bankruptcy of a legal person, this can be regarded as improper management. Directors can be held jointly and severally liable for any debts. In addition, it is an economic offense whereby the Public Prosecution Service can impose a substantial fine via the Tax Authorities (a maximum of 20,500 euros). Reason enough to adopt and file the annual accounts on time! We assist companies to deposit their annual accounts, we can assist with all company sizes. Please find more information this through clicking this link.

We can assist with all your legal, tax and accountancy needs.

Social security international employees; where are you insured?

by

Social security international employees; where are you insured?

When you work as an employee or self-employed person in several countries at the same time, it is sometimes difficult to determine in which country you are socially insured and therefore which country is entitled to levy when it comes to social security contributions. The Dutch social premiums are the AOW, Anw and Wlz (national insurance schemes) and the WW, WAO, WIA and ZW (employee insurance schemes).

In order to ensure that several countries do not claim to be entitled to levy premiums, European Union Regulation 883/2004 on the coordination of social security systems has been created. The Regulation contains designation rules that assign the levy rights to only one country in cross-border situations. Please note: the Regulation only applies to EU member states.

Article 11 of the Regulation provides that the country of employment (ie the country in which the work takes place) may in principle levy social contributions. So if you live in the Netherlands but you work in Germany, then according to the Regulation you are obliged to hand over social contributions to Germany (you can never be obliged to do so to in two countries).

Do you perform work in 2 or more Member States for 1 employer? Then Article 13 of the Regulation applies. The rules are as follows:
If you perform 25% or more of the activities in the Member State in which you live, this Member State is entitled to tax.
If you perform less than 25% of the work in the Member State in which you live, then the Member State is entitled to tax where your employer is based, or where your employer is established.

Do you perform work in 2 or more Member States for 2 or more different employers? In this case the following rules apply:
If the 2 employers are located in the same Member State, this Member State is entitled to tax;
If employers are located in 2 different Member States, 1 of which is the Member State where you live, the other Member State is taxable;
If the employers are located in at least 2 different Member States, not being the Member State where you live, the Member State where you live is taxable.

Interesting is the concept of employer that has always been formally explained for the application of the Regulation. From the above rules it emerges, as soon as one does not perform at least 25% of the work in the country of residence and there is 1 employer (this is often the case) that the country where the employer is established is entitled to tax. Consider, for example, professions within professional goods transport, where many borders are crossed and along which they are en route.

A formal explanation of the term employer is about the location on paper. The registered office is usually looked at (in which country is the employer registered). It does not seem incomprehensible that such a formal approach encourages fraudulent arrangements whereby a paper employer is established in a certain country, but actually operates from another country.

On 26 November 2019 the Court of Justice of the European Union decided in a judgment to drastically change this interpretation. In the judgment, the Court answers questions referred for a preliminary ruling by the CRvB (Centrale Raad van Beroep).
There has long been a tendency within jurisprudence towards a more material interpretation of the concept of employer within social security, but this has never been pronounced by the Court.

The present case concerned an Cypriot employer. This Cypriot employer employs many truck drivers who thus have a paper based employer in Cyprus. Social security contributions in Cyprus are considerably lower than in the Netherlands. This goes hand in hand with a poorly functioning social safety net. If you suddenly become incapacitated for work, you can to a lesser extent count on a decent benefit.

The actual situation between the truck drivers and the Cypriot employer was that the truck drivers were fully available to companies established in the Netherlands for an indefinite period of time and that they also exercised actual authority over them. The Court has therefore ruled that the employer is “who has recruited the persons concerned, who in fact has them fully available for an indefinite period of time, who exercises the actual authority over them and who de facto bears their wage costs”.

This way, structures that have nothing to do with reality are avoided and you as an employee or self-employed person are also protected against a weak social safety net.

Deadline personal income tax return 2018 & be aware of interest

by

Now that the year 2018 has ended, it’s time to prepare for the Dutch personal income tax return (“aangifte inkomstenbelasting”) 2018! The Dutch tax year is similar to the calender year.

The Dutch tax office (“Belastingdienst”) has set the filing deadline of the personal income tax return 2018 on May 1st 2019. To this purpose you may receive a so called aangiftebrief 2018 from the Dutch tax office. Our tax advisors can assist with the full process to file your personal income tax return 2018.

In case you have to pay additional personal income tax on your personal income tax return 2018 be aware of the accruing interest (“belastingrente”) on the amount on tax due following the 2018 personal income tax return. In case you file your personal income tax return 2018 after May 1st 2019, the tax office will start calculating interest.

The tax authorities have three months to impose a personal income tax assessment 2018 after having taken receipt of a personal income tax return 2018. During this 3 months period they retain the right, if filed after May 1st 2019, to charge interest on the tax amount due following the 2018 personal income tax return.

Since the interest rate is fixed at 4% on annual basis, this interest rate is well above any interest percentage you may expect to receive on a Dutch bank current account / savings account.

Personal income tax may be due e.g. in case of savings held above the applicable thresholds or other taxable income which was not yet taxed, e.g. by means of wage tax and/or a preliminary tax assessment.

Filing your personal income tax return 2018 can be especially interesting in case of an expected tax refund, e.g. in the year of migration (immigration or emigration).

The Dutch personal income tax rates for tax year 2018 (in Dutch) can be found here. The Dutch personal income tax rates for tax year 2019 (in English) can be found here

We can assist with the full process to file your personal income tax return. If needed we can arrange for a lengthy filing extension of your personal income tax return 2018, however be aware that the possible interest calculation will not be extended by the tax authorities.


Tax deduction of costs related to the purchase or sale of a participation

by

The Supreme Court recently ruled that costs related to the purchase or sale of a participation are tax deductible in case the transaction is not finalised.

Purchase costs or selling expenses incurred to acquire or sell a participation are excluded from tax deduction by means of the participation exemption (applicable when holding 5% or more of the shares in a company). The Supreme Court has defined purchase costs or sales costs as costs that would not have been incurred without that acquisition or disposal.

With external selling or purchasing costs, a clearer distinction can usually be made in this context than in the case of internal costs, the question of internal costs (for example, salaries of employees assisting with the purchase or sale in question) is to what extent these costs have been incurred solely for the purchase or sale.

Purchase costs or selling expenses only fall under the participation exemption insofar as the relevant purchase or sale has actually taken place.

The Supreme Court ruled on a situation in which a purchase or sale initially fell through, but then succeeded in a subsequent phase with another party. In such a case, it must be assessed to what extent the sales costs incurred in that first phase would also have been incurred if that phase had not taken place. Only those costs are not deductible.

It is not always possible to estimate in advance whether a purchase or sale will take place, therefore (tax) accountancy rules imply that the costs related to the planned purchase or transfer of a participation will be activated on the company’s balance sheet until it is clear whether or not the purchase or disposal goes forward.

Subsequently, it is determined to what extent the activated amounts are subject to the participation exemption (to be activated upon purchase), the remaining initially activated amount is tax deductible.