Tax Plans for 2018

As expected, there was little tax-related news in Finance Minister Dijsselbloem’s briefcase on Prinsjesdag 2017. Below, without claiming to be exhaustive, are a number of items from the plans presented. If you would like to know more about what the plans might mean for you or what else you need to consider beyond the plans, please contact one of the advisers to VWGNijhof.

For the really exciting news, we will undoubtedly have to wait for the Rutte III Cabinet’s coalition agreement.

4 bills

As we have come to expect, the tax plans for 2018 consist of a number of separate bills. In addition to the 2018 Tax Plan and Other tax measures for 2018 are the Act Abolishing the VAT Scheme for Agriculture and the Act on the Withholding Obligation of Holding Cooperatives and the Extension of the Withholding Exemption.

Abolition of the agricultural scheme

This had already been announced in an annex to the 2016 Budget Memorandum. As a result, farmers, livestock farmers, horticulturalists and foresters who were still making use of the agricultural scheme will become “standard” VAT-registered businesses. They will be required to keep VAT records.

Naturally, this means that VAT that has not been deducted on sustainable investments can still be (partially) deducted.

The agricultural scheme is with effect from 1 January 2018 abolished.

To be clear: this does not concern the agricultural exemption under income tax and corporation tax. This agricultural exemption exempts capital gains up to the WEVAB value of the land. For years, there have been rumours that the agricultural exemption is due to be abolished.

2018 Tax Plan

The 2018 Tax Plan bill contains the usual adjustments to tax rates, allowances and exemptions. After all, our taxes are used extensively to support the government’s purchasing power policy.

For the allowances A different assessment income may be used in the year in which the partnership ends. If this results in an assessment income that is 10% or more lower, the ex-partner’s income will not be taken into account.

In the VAT The definition of the term ‘medicinal product’ is being tightened up. A product will only be regarded as a medicinal product if it has been granted a marketing authorisation as referred to in the Medicines Act. As a result, products such as sun cream and toothpaste are no longer classified as medicinal products for VAT purposes.

For VAT purposes, the supply of seagoing vessels, as well as the provision of supplies to such vessels, is subject to the 0% rate. An additional requirement has now been introduced, namely that the vessel must actually be used for commercial shipping on the high seas.

For those who take part in lotteries: the net prizes will be slightly lower. The rate of the gambling tax will be increased from 29% to 30.1%.

Other tax measures (OFM 2018)

The liquidation loss scheme in the corporation tax is being amended. This concerns the rectification of a loophole which the Court of Appeal in Den Bosch had rectified on condition that the legislature would address the matter.

In addition, the consequences of a Supreme Court ruling are being rectified. This concerns the calculation of the tax saving in the case of an internal usage fee within a tax group for the purposes of corporation tax.

For the inheritance and gift tax The law will clearly set out the circumstances in which the conclusion, termination or amendment of a prenuptial agreement will result in these taxes being levied. This is partly linked to the amendments to the law on matrimonial property coming into force on 1 January 2018 (limited community of property).

The previously announced abolition of the so-called voluntary disclosure scheme is also included in the OFM 2018 Bill

Coalition agreement

As already mentioned, we expect the new coalition agreement to mark the first step towards truly far-reaching tax changes. We understand from rumours that, amongst other things, consideration is being given to raising the reduced VAT rate from 6% to 8%.

Getting started

Although the 2018 Tax Plans do not contain any “sensational” measures, there are some issues that may require your attention. We would be happy to go through them with you.

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