End-of-year tips are published in abundance every year during November and December. Of course, the end of the calendar year is a good time to take stock of your situation, but you can get started right away. And some matters need to be dealt with earlier, or take a little longer than just one or two months.
We’ve put together a list of end-of-year tips for 2016 for you, and we’ve included links to articles we’ve published recently.
High profits? Set up a private limited company
If you wish to set up a private limited company (B.V.) with retroactive tax effect from 1 January 2016, you must have a letter of intent or preliminary agreement registered with the Tax and Customs Administration before 1 October 2016.
However, even after 1 October, there are still plenty of options for contributing your business to a B.V. (whether or not with retroactive effect).
Box 3: You can still minimise the damage
The tax burden in Box 3 is often extremely high due to the low interest rates on savings accounts. This can be significantly reduced by transferring the savings into a private limited company (B.V.). An open-ended mutual fund (OFG) is also an option. And the tax-exempt investment institution (VBI) regime may well be of interest.
Box 3 tax: planning ahead of 1 January 2017
For tax in box 3, the value of assets as at 1 January 2017 is the decisive factor. Measures to limit the tax liability in box 3 or to avoid a means test for, for example, the rent or care allowance and the AWBZ/Wmo must therefore be implemented IN 2016.
Optimise the allowances and benefits provided to your employees
Employers may provide tax-free allowances and benefits in kind to their employees up to 1.2% of the total wage bill. To the extent that this WKR flat-rate limit is exceeded, the employer is liable for payroll tax at a rate of 80%.
It is, of course, a shame not to make full use of the WKR flat-rate allowance. But being faced with 80% payroll tax on the payment after the event is perhaps even more of a blow. As well as the WKR lump sum, there are many ways to reimburse or provide benefits to your employees tax-free.
Tax-free food and drink
One of the categories under the WKR is allowances and benefits in kind provided to employees in the form of food and drink. Whether income tax is payable on these depends on how you classify the allowance or benefit in kind. Have you, for example, ever considered organising a tax-efficient Christmas dinner at the office?
Financial support for your children
Tax and legal legislation and regulations offer many ways to transfer your assets to your children. With effective financial and estate planning, you can make significant tax savings in the process.
Apply for a provisional tax assessment in good time
The rate of tax interest on income tax assessments is, on an annual basis 4% and on corporation tax assessments, in fact 8%. You are liable for tax interest if you pay additional tax after 1 July of the year following the tax year. The Tax and Customs Administration will only reimburse tax interest if the (provisional) processing of your tax return takes longer than 13 weeks. It is therefore important that you yourself ask the Tax and Customs Administration to adjust your provisional assessment or refund if it transpires that you owe more or less income tax or corporation tax.
The advantages of a holding company structure
If your business is organised as a B.V., a holding company structure often offers a number of advantages. We can almost always set up such a structure for you without incurring any tax liability.
New company car: before or after 1 January 2017?
With effect from 1 January 2017, the rules regarding the additional tax liability for the private use of a company car will change. If you are considering buying a new car, it is worth weighing up which year would be best to do so: before the end of 2016 or wait until 2017?
Dissolve a tax group
For various reasons, it may be advantageous to dissolve the tax group for corporation tax purposes. A request to this effect must be submitted to the Tax and Customs Administration prior to the date of dissolution. If you wish to dissolve the tax group with effect from 1 January 2017, the Tax and Customs Administration must have received your request by 31 December 2016 at the latest.
PLEASE NOTE: Dissolving the corporate tax group may result in penalty provisions coming into effect.
E-invoicing saves money
More and more businesses are switching to e-invoicing. This involves more than simply sending your invoices as PDF files. If you support your e-invoicing with a robust administrative process, you’ll save money.
Continuing story: Self-employed workers / Self-employed workers and the DBA: the saga continues
In 2016, the VAR (Declaration of Employment Relationship) was abolished as part of the Deregulation of the Assessment of the Employment Relationship (DBA).
The period from 1 May 2016 to 1 May 2017 is considered a transitional year, during which self-employed people and their clients must (re)assess their business relationship. From 1 May 2017, the Tax and Customs Administration will resume enforcing the rules, but this period has since been extended by State Secretary Wiebes to 1 January 2018 (or for as long as may prove necessary). Only those acting in bad faith will be dealt with.
Don't forget the interest on your debt recognition
For inheritance tax purposes, a paper gift is only valid if you actually pay the interest every year. Interest on acknowledgement of debt usually falls due at the end of each calendar year.
Statement of amounts paid to third parties
If a business owner, foundation or association has paid sums to third parties, the tax authorities will ask for a statement of these payments. This does not, of course, apply if the third party is employed by you. Nor does it apply if the third party is a business owner.
Start-up entrepreneur: 5 reasons not to set up a private limited company
From a tax perspective, the legal structure of a B.V. is by no means always the most advantageous. You would then miss out on the generous income tax reliefs available to entrepreneurs.
Bad debts and unpaid creditors
The 2017 Tax Plans include a significant simplification of the VAT rules relating to bad debts and unpaid creditors.
Monument and education deductions not abolished after all
A proverbial “political blunder”, which has been swiftly withdrawn. It is unclear exactly what the status of the bill is at present. It has not been put to a vote in the House of Representatives, but it has not yet been withdrawn either.
Tax relief on donations by the director and major shareholder
The director and major shareholder has the option of allocating their donations in the most advantageous way. Part of the amount can be deducted for income tax purposes. Another part can be deducted by the private limited company for corporation tax purposes.
Avoid being held liable for your private limited company’s debts.
Not a tip for the end of the year, but something to keep a close eye on all year round: measures to avoid liability as a shareholder and/or director for the debts of the private limited company.
Self-administered pensions have been abolished; what now?
It will not have escaped your notice that the intention is to abolish self-administered pensions. In our memorandum, we set out the options available to you.