On Prinsjesdag, 20 September 2016, Mr Dijsselbloem, Minister for Finance, presented the Budget Memorandum and the 2017 tax plans. A comprehensive overview of the proposed measures can be found on the the central government’s website. In what follows, we shall confine ourselves to what we consider to be the most interesting sections.
Have you missed anything, or would you like a more detailed explanation? The advisers to VWGNijhof We are happy to explain matters to you, tailored specifically to your financial situation.
Our end-of-year tips We posted this online for you last week.
Tax plans for 2017
The 2017 Tax Plans consist of four bills. These are likely all to be debated in Parliament at the same time. In addition to the bill 2017 Tax Plan there are the bills Other tax measures for 2017 and Tax Simplification Act 2017. And the phasing out of the self-administered pension scheme for directors and major shareholders is set out in a separate bill.
Purchasing power
The 2017 tax plans will improve the purchasing power of virtually all Dutch people. The journalists at RTL were already reporting this last week.
Just as every year, there is a flurry of activity regarding rates, discounts and exemptions for 2017. We’ll spare you the details of these adjustments, which often amount to just (tenths of) a percentage point or a few tens. Of course, we do not wish to downplay the importance of these adjustments for your personal purchasing power.
Starters
Where research and development work is carried out, the remuneration payable to the director and major shareholder need not exceed the minimum wage during the first three years of the company’s existence. This constitutes an allowance under the standard remuneration scheme.
The conditions for applying the research and development scheme have been tightened.
Closing shortcuts between Box 2 and Box 3
The proposals include measures to close the loopholes between Box 2 (substantial interest) and Box 3 (savings and investments). These focus on the exempt investment vehicle (VBI) and the segregated private assets (APV). These transition routes are designed to ensure that assets in Box 3 are held within a VBI or APV for a certain period of time. During that time, the tax in Box 3 – which is perceived as very high relative to the actual return – is exchanged for tax in Box 2 based on the actual return.
No measures were announced in the 2017 tax plans to target the “ordinary savings company”. By this we mean a private limited company (B.V.) in which savings are held, but which does not qualify as a VBI. It is, of course, not out of the question that these measures may still be raised during the parliamentary debate on the 2017 tax plans. However, it seems more likely that this will be postponed until a later date (after the elections in March 2017). State Secretary for Finance Wiebes has, however, outlined three possible solutions for this in a letter.
If you wish to take steps to reduce the tax on your Box 3 assets in 2017, these must be implemented by 31 December 2016 at the latest. Read here more.
Foreign taxpayer
In a decision the Supreme Court’s rulings of last March had already been incorporated into Dutch legislation.
The 2017 Tax Plans now formalise the fact that a foreign taxpayer is entitled to the tax-free allowance in box 3.
In addition, it is being formalised that the tax burden on a foreign investor in Dutch shares must be the same as that on a Dutch investor.
Under the aforementioned decision, foreign taxpayers who have overpaid income tax or dividend tax in the past five years may apply to the Tax and Customs Administration for a refund.
Self-administered pension for directors and major shareholders
The measures relating to the phasing out of the director-major shareholder’s self-administered pension scheme had already been announced. We will shortly be providing you with further details on the practical implementation of these measures. However, a number of uncertainties and issues remain. Hopefully, these will be resolved during the parliamentary debate on the 2017 Tax Plans. After all, the pension cannot be surrendered before 1 January 2017.
Building site
The concept of ‘building site’ for VAT purposes is being brought into line with European legislation. This rather technical amendment means that VAT is now payable on the supply of a plot of undeveloped land at an earlier stage than was previously the case.
Simplification
A key theme of the 2017 Tax Plans is simplification. The legislator acknowledges that it is difficult to actually simplify tax legislation. However, a number of the ideas received from the field have been incorporated.
One of these is the scheme for reclaiming VAT on bad debts. We have already described this change in detail in our article Bad debts: VAT refund.
Reduction in corporation tax rate
The reduction in the corporation tax rate had already been announced. The rate remains at 25%, but there is what is known as a ‘tax bracket’. In 2016 and 2017, the first €200,000 of the taxable amount will be taxed at a rate of 20%. From 2018, that rate will apply to the first €250,000, and from 2021 it will apply to the first €350,000 of taxable income.
Furthermore, under corporation tax law, the anti-abuse provision relating to the deduction of interest by an acquisition holding company is being tightened.
Car/charging points
The measures concerning the private use of company cars, which come into force on 1 January 2017, have already been adopted. The additional tax liability for private use will be 22%, except for fully electric cars, for which it will be 4%. From the date of first registration, the additional tax liability percentage remains unchanged for 60 months.
Should you buy your new company car before the end of 2016, or would it be better to wait until 2017? Read on here.
A bill has been added to the 2017 Budget Memorandum, under which a lower rate of environmental tax applies to the first 10,000 kWh of electricity supplied via public charging points. As a result, the electricity is 1 to 2 euros cheaper per fully charged battery.