On Budget Day, 16 September 2015, the 2015 Tax Plan was submitted to the House of Representatives. This bill obviously contains the adjustments to the various rates and exemptions. You will not find these below. We limit ourselves to the main substantive changes to the tax legislation.
Housing market measures
- Interest on residual debt is deductible for up to 15 years (this is now: 10 years).
- The period of interest deduction for vacant former owner-occupied home for sale or a vacant future owner-occupied home will structurally be three years.
- The extension of the scheme reviving mortgage interest deduction after letting a former owner-occupied home is made structural. As a result, it will remain possible to rent out the home for sale without application of the additional loan scheme, and the interest deduction can be revived to its full extent after the rental period for the remainder of the period during which the relocation scheme applies.
Exclusion of deduction of foreign fines
Foreign fines are excluded from deduction in income and corporate tax.
Foreign fines also cannot be designated as a final taxable item for payroll tax purposes.
Abolition of elderly allowance box III
As of 1 January 2016, the increase in the tax-free allowance of up to €27,984 in box III for elderly people with an income in box I of up to €19,895 and a savings and investments basis in box III of up to €279,708 per taxpayer (the elderly allowance) will be abolished. This affects schemes with a box III-based wealth (income) test (e.g. the rent allowance).
Usual pay scheme
- The efficiency margin of 30% in the customary pay scheme for DGAs with a business salary higher than the statutory salary of €44,000 (2014) will be reduced to 25%. In 2015, the DGA's salary can be set at 75/70 * salary in 2013, if this salary was higher than €43,000 in 2013, unless it is plausible that the salary should be set at a higher or lower amount in 2015 under the customary pay scheme. Agreements with the Tax Office on the customary wage expire after 2014.
- Main rule from 2015 is that the wages to be taken into account are at least:
a. 75% of wages from the most comparable employment.
b. the highest salary of the other employees of the company.
c. € 44.000. - Thereafter, the withholding agent can make a plausible case that the wages to be taken into account should be set at a lower amount. This is possible if it is plausible that the wages from the most comparable employment are lower. Insofar as the wages do not fall below € 44,000 with this rebuttal option, the withholding agent may take into account the efficiency margin.
- The term “similar employment” is replaced by “most comparable employment”.
- The salary of the DGA is set at least at the highest salary of the other employees working at the DGA's company or at affiliated companies. From now on, all other employees at entities from which the withholding agent can benefit under the participation exemption may also be taken into account. The specific rule for situations where the customary wage does not exceed €5,000 will now also be linked to this group of affiliated entities.
Working expenses scheme
The working expenses scheme (WKR) will become mandatory for all employers from 1 January 2015. There will be five changes to the scheme and to fund this, the free allowance will be reduced from 1.5% to 1.2%.
- Necessity criterion
The necessity criterion is an open standard that assumes that whatever facilities an employer considers necessary in the course of its business can be provided to the employee without taking into account the employee's private benefit for tax purposes. The necessity criterion will be introduced for now only for tools, computers, mobile communication devices and similar equipment. Initially, necessity will be left to the employer, although his judgement will be objectified by a reasonableness test. A condition for application of the necessity criterion is that the employee returns the allowance or provision or reimburses the (residual) value if it is no longer necessary for the performance of the employment. The necessity criterion cannot be used in the context of a cafeteria scheme. With regard to employees who are also directors or supervisory directors of the withholding agent, an increased burden of proof applies with regard to the necessity of a reimbursement or provision. - Annual settlement
Withholding agents will now only have to determine their tax liability under the WKR once a year. As a result, it is no longer necessary to check per return period whether the free space is exceeded. Any tax due will be paid in the first tax period of the following calendar year. However, it will still be possible to pay the tax in parts earlier. - Group scheme
The CRD can be applied at group level by introducing the so-called group scheme. The condition for applying the group scheme is that the parent company must have 95% ownership of the (sub)subsidiaries during the entire calendar year. The tax due on exceeding the common room must be declared and paid by the group entity with the largest wage bill on which wage tax is levied. When applying the group scheme, the employers concerned are jointly and severally liable for the entire tax due by the group. The choice whether or not to apply the group scheme must be made annually in the first tax return following the calendar year to which the choice relates. - Targeted exemption for industry-specific products
Targeted exemption is a discount of up to 20% on (branch) own products of the employer or an affiliated company. A maximum of €500 per employee per calendar year is specifically exempted in this way. - Distinction between reimbursements/provisions/dispositions
There will be a new targeted exemption for a number of workplace-related facilities for which a nil valuation currently applies. This will include facilities provided and reimbursed in addition to those provided. It is not yet clear which facilities will be designated for this purpose.
Lifetime
Participants in a life-course savings scheme covered by the transitional rules who did not make use of the arrangement in 2013 that only 80% was taxed when the entire life-course credit was withdrawn, will be given a one-off opportunity to make use of an 80% arrangement in 2015. This 80% scheme will apply at most to the amount of entitlements on 31 December 2013. After applying the 80% scheme, the taxpayer can no longer use the transitional right, as the entire credit must be withdrawn.
Extension of reduced VAT rate on housing renovations
The application of the reduced VAT rate on labour involved in renovation and repair of houses will be extended until 1 July 2015. It must be for dwellings that have been in use for at least two years.