If, as an entrepreneur, you have plans to invest, you can commit to doing so in 2020. However, it might be more advantageous to postpone this until 2021.
Facilities
Business owners can make use of a number of tax incentives when investing in business assets:
- Small-scale Investment Allowance (KIA);
- environmental and energy investment allowances (MIA and EIA);
- employment-related investment allowance (BIK).
KIA
If the total amount of investments eligible for the KIA is less than €2,400 or more than €323,544, the investing entrepreneur is not entitled to the KIA.
Between €2,400 and €58,238, the KIA is 28% of the investment amount. Between €58,238 and €107,848, the KIA is a fixed amount of €16,307. And between €107,848 and €323,544, this fixed amount is reduced by 7.56% of the amount by which the total investment exceeds €107,848.
These are the figures for 2020. For 2021, these figures will be increased in line with indexation. The KIA can be optimised by either entering into investment commitments in 2020 or, conversely, deferring them to 2021.
MIA and EIA
MIA and EIA can be claimed for business assets included in the environment and energy list. Business assets are only included on those lists if they are sufficiently innovative.
It is best not to exclude from the calculation an investment in a fixed asset that appears on the lists in 2020 but is not expected to appear on them in 2021. Investments in innovative assets that are not yet on the lists might be better made in 2021.
If a fixed asset has not yet been brought into use in 2020, KIA, MIA and EIA may be claimed in 2020 in respect of the amount paid in 2020.
BIK
The BIK has not yet been introduced. The scheme forms part of the 2021 Tax Plan, which is currently being considered by the Parliament.
If the BIK is passed by parliament, the scheme will come into force on 1 January 2021. However, investments made from 1 October 2020 onwards may already be eligible for the BIK. It is essential, however, that the final payment for the investment is made after 31 December 2020.
The BIK is a reduction in the payroll taxes payable by the business owner. This reduction amounts to 3% of the investment amount (2.44% where the investment amount exceeds €5,000,000). The BIK does not result in a lower depreciation base. Furthermore, the KIA, MIA and EIA can be claimed in addition to the BIK.
Not all investments are eligible for BIK. Please read the terms and conditions in our article BIK proposal submitted. These conditions may still change during the parliamentary debate on the bill.
In a letter On 28 May 2021, the State Secretary for Finance announced that the bill intended to regulate the BIK had been withdrawn.
The BIK will therefore definitely NOT be introduced.