Now that the 2016 Tax Plan bill has been passed by the Senate (on 22 December 2015) and the inflation-adjusted figures for the various rates and allowances have been announced, all the figures applicable for 2016 in the context of taxation are now known. An overview of these figures is available at www.rijksoverheid.nl. Naturally, this is not yet a comprehensive overview of all the figures relevant to taxation, but contains only the most significant changes. This year, therefore, this overview is entitled “Key changes to taxation for 2016” received. In previous years, the overview was still called the “End-of-year press release“. We would like to draw your attention to two important changes.
Tax-free capital in Box III
In Box III, income from savings and investments is taxed. A flat-rate return of 4% is calculated on the value of the assets falling within Box III as at 1 January of a tax year. Before the flat-rate return is calculated, the value of the assets is reduced by the tax-free allowance.
The tax-free allowance in 2016 per tax partner is € 24.437 (2015: €21,330). The intention is to further increase the tax-free allowance for 2017 to €25,000. The elderly allowance on the tax-free allowance will be abolished with effect from 1 January 2016 (in 2015, this allowance amounted to a maximum of €28,236 per tax partner).
For older people in particular, the increase in the tax-free allowance acts as a band-aid for the wound caused by the abolition of the elderly person’s allowance. Not only does this mean that more income tax is payable on assets in Box III, It may also result in the loss of entitlement to care and housing benefit. Measures to prevent this must before 1 January 2016 have been implemented. After all, the reference date for Box III is 1 January. The assets held on 1 January 2016 are therefore decisive for entitlement to healthcare and housing benefit throughout 2016. See also our article Wealth test surcharges.
Gift tax exemptions
The gift tax exemption for gifts to children for 2016 is, per child, € 5.304 (2015: €5,277). This exemption will be increased on a one-off basis to € 25.449 (2015: €25,322) in the case of a gift to a child who is aged 18 or over but under 40.
If the gift is used for the child’s own home or education, this exemption is further increased to € 53.016 (2015: € 52.752).
The exemption for other beneficiaries (such as grandchildren) amounts to in 2016 € 2.122 (2015: € 2.111).
The announced increase in the gift tax exemption for a gift made for the purpose of purchasing one’s own home to € 100.000 will not come into force until 1 January 2017.
The rates for inheritance and gift tax will remain unchanged. If the partner or children are the beneficiaries, the rate applies to an amount received (after deduction of exemptions) of € 121.903 (2015: €121,296): 10% and, for amounts above that, 20%. Grandchildren pay 18% instead of 10% and 36% instead of 20%. For other beneficiaries, the rates are 30% and 40%.
You can find an overview of all exemptions from gift tax in our factsheet on this subject.