In addition to the phasing out of the self-administered pension scheme, the tax plans for 2017 have cleared the parliamentary hurdle. As a result, the central government has an overview of the main changes to taxation published for 2017.
Gift tax exemptions
The gift tax exemptions have all been increased again. The new amounts are set out below. We explain how the exemptions work in our factsheet Gift tax exemptions.
| 2017 | 2016 | |
| Other acquirers | € 2.129 | € 2.122 |
| Children | € 5.320 | € 5.304 |
| Children aged between 18 and 40 (one-off) | € 25.526 | € 25.449 |
| Children aged between 18 and 40 (one-off grant for expensive studies) | € 53.176 | € 53.016 |
| Children aged between 18 and 40 (one-off payment per property) | € 100.000 | € 53.016 |
Business Succession Facility (BOF)
The amounts under the Business Succession Scheme (BOF) have also been increased. The acquisition of business assets is fully exempt from inheritance and gift tax up to an amount of €1,063,479 (2016: €1,060,298). To the extent that the value of the business assets exceeds €1,063,479, 83% of the excess is exempt.
The starting point for the BOF is the value of the business as a whole. Where a part of that is acquired, it must be allocated pro rata to the 100% exemption.
This massive exemption naturally plays an important role in almost all advice on business succession.
Car allowance
With effect from 2017, the additional tax liability for the private use of a company car is: 22%. A discount is still available only for fully electric cars. This amounts to 18%, meaning that the additional tax liability for these cars is: 4%.
A transitional arrangement applies to cars registered before 1 January 2017. Please see our factsheet for further details. Taxable benefit for private use of a car – rules coming into force in 2017.
Business facilities
The business tax reliefs under the Income Tax Act remain unchanged, with the exception of the maximum allocation to the retirement reserve. These reliefs are still more than worth considering to see whether your income might qualify as business profits.
| 2017 | 2016 | |
| Self-employment deduction | € 7.280 | € 7.280 |
| First-time buyer’s allowance | € 2.123 | € 2.123 |
| Allocation to the retirement reserve | 9,8% | 9,8% |
| Maximum allocation | € 8.849 | € 8.774 |
| Strike allowance | € 3.630 | € 3.630 |
| SME exemption | 14% | 14% |
VAT
The most significant change to VAT in terms of day-to-day practice concerns the rules on bad debts. We describe these rules in our factsheet Bad debts and unpaid creditors. For accounts receivable that had already been outstanding for one year prior to 1 January 2018, the VAT paid may only be reclaimed in the first periodic return of 2018.
The change to the definition of a building site for VAT purposes is likely to affect far fewer people. As a result of this change, from 2017 onwards there will be many more cases where the supply of a building site will be subject to VAT (21%).
Payroll tax
We described the changes to the (valuation standards for) payroll tax earlier this week in our article Valuation standards for payroll taxes (2017).