Companies

Two tax brackets in box 2

Box 2 levies taxes on income from a substantial interest, such as dividends paid to a director and major shareholder from their private limited liability company (BV). Currently, a single tax rate of 26.9% applies. As from 2024, two tax brackets will be included in the box 2 rate. The rate becomes progressive (the more income, the higher the rate). The proposal is as follows:

In line with the low rate of 24.5%, the conversion of loss from a substantial interest into a tax credit: credit reduced to 24.5%.

• Tip! In the event of varying profits, distribute dividend payments over the years to remain in the lowest tax bracket as much as possible. This could include the possibility of dividing income from a substantial interest among the partners in a tax partnership. In 2024, the lowest rate is 2.4 percentage points lower than the rate in 2022. Make use of this difference by paying dividends up to € 67,000 in 2024. Partners can even gain double benefits by paying a dividend of € 134,000, which is divided equally between both partners (€ 67,000 per person) and therefore, taxed at the lowest rate by both persons.

Investment facilities

In order to encourage energy investments and investments in environmentally-friendly business assets, various investment facilities are available. The energy-saving investment credit (EIA), the environmental investment credit and the discretionary depreciation for environmental investments would end on 1 January 2024. However, these schemes have now been extended to 31 December 2028. The percentage of the EIA will be reduced from 45.5% to 40%.

• Tip! Make use of the EIA wherever possible in 2023!

Reduction of SME profit exemption

The government wants to reduce the SME profit exemption from 14% to 12.7%. The SME profit exemption reduces taxable profits. If your business suffers a loss, the SME profit exemption will reduce the fiscal loss.

• Tip! Bring profits forward, free up provisions and make the best possible use of the current 14% rate.

Reduction of self-employed deduction

The self-employed deduction is being scaled down accelerated by € 1,280 per annum. The self-employed deduction is incrementally being reduced to € 900 in 2027. For 2024, the self-employed deduction amounts to € 3,750.

BV can no longer deduct donations

In 2023, BVs are still able to deduct donations made to charitable organisations (ANBI) within certain limits. As of 1 January 2024, a simplification will take place of donations to charities through the BV. In this respect, the deduction for gifts ceases to apply in corporation taxation. However, in principle, the Tax Administration will neither qualify gifts that take place through the BV as a taxable dividend.

• Tip! A gift through a BV to a qualifying charitable organisation remains exempt from gift tax.

Higher reinvestment reserve on government intervention

Through the reinvestment reserve (herinvesteringsreserve, HIR), taxation of a book profit can be deferred under certain conditions. An easing of the conditions will take place after 2024. As a result, after a partial discontinuation compelled by the State of the one company, an entrepreneur subject to income tax rules may also create a reinvestment reserve in another already existing company. The requirement of the reinvestment plan remains.

• Tip! The entrepreneur can also transfer the tax claim to a new company.

Protective assessment excessive borrowing

In the event of emigration, a protective assessment can be imposed to secure a tax claim that has arisen in the Netherlands. If a director and major shareholder emigrates, receives a protective assessment with deferral of payment and borrows excessively from a new foreign company after emigration, this may discontinue the deferral of payment. It is proposed to amend the law on this, with the aim of ensuring that collection of the protective assessment is only carried out if and to the extent that excessive borrowing occurs from a company to which the protective assessment relates and that the increase in debt has not previously discontinued the deferral of payment.

• Take note! Collection of the protective tax assessment may take place insofar as was excessively borrowed from companies in respect of which the director and major shareholder had been granted a protective tax assessment deferral of payment.

Losses on tax-neutral return

If a decision is taken to run the enterprise of a BV in future from a company subject to income tax rules, this can be done under conditions without direct taxation (tax-neutral return). Deductible losses of the BV can then be carried over to the company subject to income tax rules. In order to avoid that the deductible losses of the company subject to income tax rules give rise to a greater tax advantage due to differences in tax rates, the amount of losses to be taken into account is calculated on a flat-rate basis. Mistakenly, this was not correctly codified in Dutch tax law for 2023. By decree of 6 July 2023, it was stipulated that this, in anticipation of the change in the law, would be adapted retroactively to 1 January 2023. It is now proposed to amend this in Dutch tax law.

• Tip! Regularly assess whether the BV is still the appropriate legal form for the company from a tax and liability point of view.

Qualification of legal forms

If legal forms are treated differently in the Netherlands than abroad, this can lead to undesirable situations such as double taxation or double deduction. To avoid such situations as far as possible, legal forms and foreign legal forms, in principle, are assessed based on the legal form comparison method. This will now be laid down by law. According to this method, certain civil-law characteristics of foreign legal forms are compared with those of Dutch legal forms in order to treat those foreign legal forms in the same way for Dutch taxation. New rules will be introduced for non-comparable foreign legal forms.

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