End-of-year tax suggestions

1. Make use of the corporate tax rate step up.

The first tranche of the corporate tax with a rate of 15% will be extended to 395,000 euros in 2022. See this table for an overview:

There are various options for using the lower rate. One option is to break the existing fiscal unity for corporate income tax purposes.

2. Buy or lease a company electric car

If you plan to buy or lease an electric car from your company in the short term, do so this year. From 2022, the tax addition will be increased from 12% to 16%. Moreover, this lower rate only applies to the first 35,000 euros of the catalog value instead of the first 40,000 euros. By buying or leasing the car in 2021, you will benefit from a lower addition for 60 months. The environmental investment deduction also plays a role here.

3. Donating tax free amount for a home

If you want to give your children an amount for their own home (purchase, mortgage repayment, renovation, etc.), this donation is tax exempted this year up to an amount of 105,302 euros. Under certain conditions, the donation can be spread over several years. If you donate this year, this will reduce your assets in box 3 by the same amount. This can save you a maximum of around 1,800 euros in tax. Your children may pay extra box 3 tax.

We would like to observe that the government has announced that it will abolish this scheme as of 1 January 2024. You can therefore still make use of this scheme in 2022 and 2023.

4. Use the free space within the work-related costs scheme (WKR)

Due to corona, the free space in the work-related costs scheme is 3% this year up to a wage bill of 400,000 euros and 1.18% over the excess. The percentage of 3% will be reduced to 1.7% in 2022. Use the free space if possible this year, because you cannot transfer unused free space to 2022.

It can be attractive – for both the employee and the employer – to accommodate (part of an end-of-year) bonus in the free space. The tax authorities agree to an amount of 2,400 euros. This also applies to a director / shareholder who is employed by his own BV.

In that case, pay close attention to the bonus ban if you have made use of the extension of the special tax deferral and/or the NOW scheme.

5. Check the expense allowances

The approval for allowing the fixed travel allowance to continue unchanged when working from home will expire on December 31, 2021. In addition, there will be the option of a tax-free allowance of 2 euros per day worked from home. Due to changed circumstances, it may be necessary to substantiate the fixed cost reimbursement again. It is therefore advisable to check the (fixed) fees and – if possible – to optimize them.

6. Optimize the investment deduction

If you invest more than 2,400 euros this year, you may be entitled to the small-scale investment deduction (KIA). This is an additional deduction from the profit, which depends on the size of the investment commitments entered into. Bringing forward or deferring investment obligations can therefore be worthwhile!

If you invest in an environmentally friendly way, you may be entitled to the environmental investment deduction (MIA). The percentages of this will be increased in 2022, so it would be attractive to postpone your investments until 2022. However, it is not yet clear which business assets qualify for the MIA in 2022 and what percentage then applies to the business asset in question. This will be published in a new Environmental List at the end of 2021. Then prepare the investment completely together with your supplier and decide in December 2021 whether you want to invest in an environmentally friendly way this year or better next year.

In addition to the above year-end tips, we have listed the most important tax policy intentions of the new cabinet.

• Raising of the limit for the bill on excessive borrowing from one’s own BV increased from € 500,000 to € 700,000;
• Tax in box 3 on real returns from 2025, with special schemes for investment property;
• Retention of the reduced corporate tax rate of 15% and the current long first rate bracket of €395,000;
• In more cases levying corporate tax on activities in low-taxed countries;
• The rate of transfer tax on the acquisition of non-residential properties and homes for investment from 8% to 9%;
• Further evaluation and decision on the tax business succession facility in 2022;
• Abolition of gift tax exemption of € 100,000 for owner-occupied home with effect from 1 January 2024;
• Kilometer charge from 2030;
• Phasing out exemption from BPM for delivery vans in three steps from 2023;
• Increase in budgets for energy and environmental investment deductions from 1 January 2023 and 1 January 2025 respectively;
• Abolition of income tax averaging scheme from 2023.

If you have further questions about the above options or measures or if you would like further information, please contact us.