State Secretary for Finance Wiebes provided further information on investment deductions at the request of MP Bashir (SP) (letter dated 20 February 2015, reference: DGB/2015/0754U). Earlier this year, we pointed out the entrepreneurs among you in a article already on the possibilities of KIA, MIA/Vamil and EIA. Proper investment planning leads to optimal use of facilities for entrepreneurs.
All the investment allowances mentioned, except the KIA (small-scale investment allowance), are meant to encourage entrepreneurs to make environmental investments. But, according to Mr Bashir, investors have now run off with these.
By this he is referring to partnerships (usually a partnership) set up specifically to make environmentally friendly investments. If that partnership runs a material company and the participants are (jointly) liable for the debts of that company, the participants (investors) can benefit from MIA and Vamil. In practice, this often involves investments in wind and/or solar energy or in (manure) processing plants.
Investors who want to eat from what the government has put in the tax coffers of entrepreneurs would be wise to carefully weigh the risks they run in doing so. After all, only if they are jointly liable can the facilities be applied. The lure is often that in the first year of participation there is a hefty deduction, often leading to a higher tax benefit than the amount invested. But if the investment unexpectedly returns less than expected, there may well be the proverbial boomerang.