Shortly after we arrived at a article outlined the broad outlines of the BIK, the text of the scheme has been added to the Draft Bill: 2021 Tax Plan.
In a letter On 28 May 2021, the State Secretary for Finance announced that the bill intended to regulate the BIK had been withdrawn.
The BIK will therefore definitely NOT be introduced.
Reduction in payroll tax
The allowance is applied as a reduction in the payment of payroll taxes (income tax and social security contributions). Payroll deductions will be reduced to a maximum of zero. This is assessed on a calendar-year basis (the reduction may, if necessary, be implemented by means of adjustment notices).
The BIK tax relief per calendar year amounts to:
3% of the investment amount up to and including €5,000,000, plus;2.44% of the investment amount, in so far as it exceeds €5,000,000.
Business owners who do not employ any staff cannot make use of the BIK scheme. Business owners with few staff can only apply the tax relief up to the amount of the payroll taxes they are required to pay.
The BIK applies only to business owners who are required to deduct payroll taxes:
who are also liable for income tax or corporation tax;and insofar as, apart from the applicable sliding scale, the small-scale investment allowance (KIA) could be utilised.
Fiscal unit
For the purposes of corporation tax, groups of taxpayers may, at their own request, be treated as a single taxpayer: a fiscal unity.
A tax group which, taken as a whole, makes job-related investments may designate one withholding agent belonging to the tax group as the BIK withholding agent for the tax group’s job-related investments.
The BIK application may specify the desired allocation of the tax credit to the constituent parts of the fiscal unit. The BIK certificate then states, for each payroll tax number, the amount of the tax credit to be taken into account.
Investments made available to another company within the tax group are, however, eligible for the BIK scheme.
BIK statement
Before the BIK tax relief can be applied via the payroll tax return, a BIK certificate must be applied for. This can only be done electronically via the Ministry of Economic Affairs (the Netherlands Enterprise Agency; RFO).
An application for a BIK certificate can only be made once the total amount of investment reaches €20,000.
A maximum of 4 BIK certificates may be applied for per calendar year, with a maximum of 1 per calendar quarter.
The application must be submitted no later than 3 months after the end of the last calendar year in which the final payment for the job-related investment was made.
Job-related investment
This term seems a little misleading. This is because there is no requirement to establish that the investment is related to one (or more) job(s).
The scheme applies to business assets that have not yet been used. An investment is only considered a job-related investment if:
the obligation relating to the acquisition of the asset was entered into on or after 1 October 2020;the asset has been paid for in full, with the final payment made in 2021 or 2022;and has been put into use within 6 months of full payment being made.
The following are excluded from the scheme:
business assets used (primarily) for forestry operations or a business to which a double taxation agreement applies;land (including the ground beneath buildings);houses and houseboats;passenger cars;vessels used for representative purposes;securities, receivables, goodwill, licences, exemptions, concessions and other dispensations under public law;animals;fixed assets intended primarily to be made available to third parties;business assets with an investment value of less than €1,500;commitments entered into between:people who belong to the same household;blood relatives or relatives by marriage in the direct line, or persons forming part of their household;persons entitled to an estate to which the business asset belongs;any person who holds at least a one-third interest in a company, and the company (and vice versa).
Commitments relating to the improvement of a fixed asset are not classified as a job-related investment.