On 18 December 2018, the Senate passed all seven bills containing the tax plans for 2019.
End-of-year press release
Following on from this, the Department of Finance has produced a handy overview of the Key changes to taxation for 2019 published. This overview sets out the rates, exemptions and discounts that will apply in 2019 (figures for 2016, 2017 and 2018 are also included).
We have already discussed most of the changes in detail in previous articles. We will highlight a few of them below.
Donate
The gift tax exemption for gifts made to children in 2019 is: € 5.428 (2018: €5,363). By making a gift in 2018 and another immediately in 2019, you can gift €10,491 tax-free to your children within a short period of time.
Higher tax allowances apply to gifts to children. For example, the so-called “jubelton” rose in 2019 to € 102.010. The gift must then be used for the recipient’s own home.
For gifts to persons other than children, a lower exemption applies in 2019: € 2.173 (2018: € 2.147).
You can find an overview of all exemptions and rates in our factsheet Gift tax exemptions. This factsheet will be updated shortly with the figures for 2019.
If you received a gift in 2018, you may need to file a gift tax return. The deadline for this is 28 February 2019. Formally, you must request a tax return form. However, it is much more convenient to download it from the Tax and Customs Administration’s website. You can find more information on filing a gift tax return in our factsheet Gift tax return.
Volunteer
In 2019, a volunteer may “earn” slightly more without the foundation or association for which the voluntary work is carried out having to deduct income tax. This applies where the total of allowances and benefits in kind per month does not exceed €170 (2018: €150) and per year does not exceed €1,700 (2018: €1,500). Please note: these amounts apply per calendar month and calendar year, and it is important to consider the actual amounts provided in a given month or year.
VAT rate
The reduced VAT rate will be increased from 6% to 9% with effect from 1 January 2019.
The standard VAT rate remains unchanged: 21%.
Rates
The income tax rates for boxes 2 and 3 will remain unchanged in 2019. Income from a substantial interest (box 2) is taxed at a rate of 25%. And the flat-rate income from savings and investments (box 3) will be taxed at a rate of 30%. However, the flat-rate returns for box 3 will change. Please see our article for further details Box 3 returns for 2019.
After 2019, the rate for Box 2 will change. In 2020, it will be increased to 26.25% and in 2021 to 26.9%. It is therefore important to assess in 2019 whether it would be advisable to have your private limited company pay out a dividend.
The corporation tax rate is changing, however. In 2019, your private limited companies will be liable for corporation tax on profits up to €200,000 at a rate of 19% (2018: 20%). For profits above €200,000, the rate remains unchanged: 25%. After 2019, corporation tax rates will be reduced further.
Financial planning
The announced changes to the various rates, exemptions and discounts could have a significant impact on your financial planning. It is advisable to planning review it (or have it reviewed) regularly (every 3 or 5 years). It is a good idea to review your financial planning as part of your regular maintenance, at least in 2019.
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