With just a few weeks to go until Christmas, many people are wondering what they need to consider in terms of finances and tax matters before they can enjoy the Christmas holidays without a care in the world. We’ve briefly listed a few points to bear in mind.

These points for consideration stem in part from the legislative proposals relating to the 2025 tax plans. These legislative proposals are still being considered by Parliament. It is therefore not yet certain that all the measures will be introduced as described below.

Contents

• Save on inheritance tax by making a gift
• Pay into an annuity policy or invest in a bank savings product
• Pay a dividend in 2024 and/or 2025
• Excessive borrowing: to be resolved by 31 December 2024
• Make the most of the available allowance under the WKR
• Bear in mind that employers’ contributions will be higher
• Remember the UBD exercise
• Be careful with self-employed people
• Keep track of your provisional tax assessment
• Dissolve or form a tax group
• Make a tax-efficient donation in 2024
• Interest relief for property companies
• Box 3
• VAT rate

Save on inheritance tax by making a gift

Each year, gifts may be made free of gift tax. The exemptions apply per recipient:

If the total value of gifts made in a calendar year does not exceed these amounts, no gift tax return needs to be filed.

The tax exemption for a gift to children may be increased on a one-off basis, during the period in which the child is aged 18 but under 40, up to the following amount per recipient:

To claim this one-off increased exemption, a gift tax return must be filed.

Gifts for one’s own home, made in 2022 (or perhaps supplemented in 2023), must actually have been spent on one’s own home by 31 December 2024 at the latest. If this is not possible, this must be reported to the Tax and Customs Administration by 31 May 2025 at the latest. Depending on how the gift was arranged, the gift must either be repaid or gift tax must be paid retrospectively.

Pay into an annuity policy or invest in a bank savings product

By paying premiums into an annuity policy or contributing to a bank savings scheme, you can reduce your income and the tax you have to pay. The payments from the annuity will be taxed when they are due.

Any premiums or contributions that you wish to deduct from your income for 2024 must have been paid or made by 31 December 2024 at the latest.

The premium/contribution is only tax-deductible if you have sufficient annual and/or reserve allowance. This allowance has been significantly increased since 2023, but it is still advisable to have someone calculate in advance whether you have sufficient deduction allowance.

Pay a dividend in 2024 and/or 2025

Given the tax rates in Box 2, it may be worth having your private limited company pay out a dividend in 2024. Or perhaps in 2025 instead.

The tax rate in Box 2 is applied on a sliding scale. The first €67,804 (€67,000 in 2024) per tax partner is taxed at 24.5%. As long as the income in Box 2 remains below the tax threshold, paying out dividends may be an attractive option.

If you believe you can postpone the payment of dividends for a long time to come and expect to achieve a good return, paying them out in 2024 and/or 2025 is not an attractive option.

The rate above the threshold in 2024 is: 33%. This will be reduced to 31% in 2025. It is therefore advisable to defer any dividends above the tax bracket threshold until (early) 2025.

When paying a dividend of up to €67,804 in 2025, it is important to note that this may result in a (further) reduction in the general tax credit. This is the case if the aggregate income, excluding the dividend, is less than €76,820. The reduction in the general tax credit will then amount to 6.337%.

Excessive borrowing: to be resolved by 31 December 2024

A director and major shareholder who borrows more from his private limited company(ies) than the threshold amount must pay a substantial interest levy on the excess amount. The reference date for this scheme is the last day of each calendar year.

The next reference date is therefore 31 December 2024. The levy can only be avoided by taking action before the reference date. Please note that the threshold for 2024 is only €500,000 (in 2023, it was €700,000).

If you have paid substantial interest tax in 2023 or 2024 on a benefit arising from excessive borrowing, it may be advisable to safeguard your rights by lodging a pro forma objection in good time. After all, this scheme could well be declared to be in breach of EU rules.

Make the most of the available allowance under the WKR

The tax-free allowance under the WKR scheme amounts to 1.92% on the first €400,000 of the wage bill and, above that amount, 1.18% of the wage bill. Any portion of the discretionary allowance not used in 2024 cannot be carried forward to 2025.

It is therefore important to make the best possible use of the discretionary allowance in 2024. The salary components included in the discretionary allowance must, however, have actually been received by the employee(s) in 2024. For example, if you pay for the 2025 staff party in advance in 2024, the costs will still be charged to the 2025 discretionary allowance.

Bear in mind that employers’ contributions will be higher

In 2025, the maximum contribution base will rise to €75,860. As a result, you will pay almost €1,000 more per year in employer’s contributions for employees whose wages exceed the maximum contribution base in 2025.

Remember the UBD exercise

UBD stands for Amounts Paid to Third Parties. This statement must cover amounts paid out in 2024 by 31 January 2025 at the latest have been done.

Withholding agents must submit a UBD return for:

• one or more payments;
• to a natural person;
• for work and services carried out for the withholding agent or for a company associated with the withholding agent.

There is no need to submit a UBD declaration for payments:

• wages paid to employees
• to artists and professional sportspeople, under the artists’ or professional sportspeople’s scheme
• to volunteers who receive payments under the volunteer scheme;
• for which a VAT invoice has been issued (if VAT is reverse-charged, a UBD declaration MUST be submitted).

Be careful with self-employed people

With effect from 1 January 2025, the Tax and Customs Administration will once again actively check whether self-employed individuals without employees (ZZP-ers) are actually working as self-employed persons. If not, back taxes and social security contributions will be levied on the client. Interest will be charged and, in many cases, a fine will also be imposed.

For self-employed individuals, this may mean that expenses incurred are not tax-deductible and that the tax relief schemes for self-employed people (the self-employed person’s allowance and the SME exemption) have been applied incorrectly. The Tax and Customs Administration may issue a tax assessment in respect of these matters to the self-employed individual.

In addition to the Tax and Customs Administration, the pension fund could also contact the client and the self-employed person to collect contributions retrospectively.

The Tax and Customs Administration has recently published a guidance note explaining how an employment relationship is assessed.

From 1 January 2026, this assessment will be carried out (in part) in accordance with the VBAR Act (Act on Clarification of the Assessment of Employment Relationships and the Introduction of a Legal Presumption). This bill is still before Parliament.

Keep track of your provisional tax assessment

Tax interest rates are being reduced slightly, but remain extremely high. For corporation tax, this rate is likely to be 9.5% in 2025 (previously 10.5%) and for other taxes 6.5% (previously 7.5%). The only way to avoid the tax authorities charging you tax interest is to apply for a provisional assessment in good time (for assessments relating to 2024: by 30 April 2025 at the latest).

If you do end up having to pay tax interest, it may be worth lodging a pro forma objection against it. In a recent case, the District Court of Northern Netherlands reduced the amount of tax interest.

Dissolve or form a tax group

If you wish to dissolve an existing corporate tax group with effect from 1 January 2025, the Tax and Customs Administration must receive your application by 31 December 2024 at the latest. Please note: dissolving a corporate tax group may result in tax being levied.

It is possible to establish (or extend) a tax group with retrospective effect. If the tax group is to take effect on 1 January 2025, the Tax and Customs Administration must have received the application by 31 March 2025 at the latest.

Make a tax-efficient donation in 2024

With effect from 1 January 2025, the corporate tax rules relating to tax-efficient donations will be abolished. This means that:

• a donation made by a private limited company is no longer deductible from profits;
• A donation made by a private limited company for reasons relating to its shareholders results in a profit distribution.

Donations made with the intention of qualifying for these schemes must be made by 31 December 2024 at the latest.

Expenditure incurred by a private limited company (BV) in the interests of its business is not a donation, but remains deductible from profits as a business expense. Examples include the costs of advertising, sponsorship and corporate social responsibility (CSR).

The rules governing the deduction of charitable donations for income tax purposes remain unchanged:

• regular donations donations to ANBIs are tax-deductible to the extent that the threshold is exceeded;
• for periodic gifts The threshold does not apply to ANBIs and associations with 25 or more members;
• donations to cultural ANBIs will be increased by a factor of 1.25 (up to a maximum total of €1,250).

Interest relief for property companies

The tax plans for 2025 include a measure under which private limited companies (BVs) whose assets consist largely of property will not be able to deduct interest on loans. This is referred to as ‘earnings stripping’. However, it appears that this measure will not make it through the political process. We explain the measure included in the tax plans in a factsheet.

Box 3

Ever since the Supreme Court handed down the ‘Kerst’ judgement on 24 December 2021, everything relating to Box 3 has been turned upside down. The Tax and Customs Administration has recently sent out letters to inform taxpayers that the Actual Return Declaration (OWR) form is expected to become available in June 2025. Until this form is available, the Tax and Customs Administration will not adjust tax assessments to reflect the actual return.

Only those individuals to whom the Tax and Customs Administration has issued a final income tax assessment (the assessment bearing the reference number H.96) for 2019, dated 12 November 2021 or later, need to take action by before 1 January 2025 to submit a request for an ex officio reduction of this tax assessment. This can be done by sending a simple letter to the Tax and Customs Administration. The grounds for the request must then be set out using the OWR form. This will be possible from June 2025.

A request for a reduction in the income tax paid obviously only makes sense if the return actually achieved in a tax year is lower than the flat-rate return on which tax has been paid. In its judgements in 2024, the Supreme Court set out a number of rules for determining the actual return. See our article Supreme Court again rejects flat-rate levy box 3.

VAT rate

With effect from 1 January 2025, the reduced VAT rate for agricultural products will be abolished. This means that the standard rate (21%) must be applied. This measure has already been approved as part of the tax plans for 2024.

The rate increases proposed in the 2025 tax plans will come into effect on 1 January 2026. This measure is far from controversial. For the time being, it is proposed to abolish the reduced VAT rate for:

• art
• supply and lend (e-)books;
• opportunities for sport and swimming;
• accommodation in hotels, guesthouses and holiday accommodation establishments;
• access to museums, the performing arts, sporting events and performances.

The purpose of this note is to outline a scheme. For the sake of readability, matters have therefore been simplified. VWG is therefore not liable for the consequences of actions taken or not taken as a result of this memorandum.