Year-end Tax Tips
With the end of the year 2022 approaching, this is a great time to check whether you still need to take action on tax matters. Some matters cannot wait until 2023, while others call for postponement into the new year. In any case, there are several changes that require attention. What they are, you can read in these year-end tax tips.
Content year-end tax tips:
- All entrepreneurs
- IB entrepreneur
- Companies and DGA’s
- VAT and transfer tax
- Estate planning / Private
- Own home
1. Push profits 2022 with provision
Are you noticing that your tax profits for this year are higher than you would like, despite rising prices? And do you expect to incur major expenses in 2023 or later? If so, you may be interested in making a provision this year. Additions to a provision reduce your taxable profit. A point to note here is that the future expenses must have their origin in facts and circumstances that occurred in 2022 or earlier. Furthermore, you must be able to attribute those facts and circumstances to that year and it must be reasonably certain that you will incur the expenditure. Discuss with your adviser whether you can still make a provision in 2022.
2. Start reinvesting before 2023
Did you sell an asset in 2019 and make a book profit for tax purposes in the process? And have you placed this book profit in a reinvestment reserve (HIR)? If so, you have until 1 January 2023 to make a new investment. Now, sometimes the purchase of a new asset is delayed due to special circumstances. In such a situation, request the tax authorities to extend the three-year period. The inspector will only grant this request if you can prove that you have started reinvesting.
Record your reinvestment intention in a written document. Indeed, should the inspector believe that you do not (or no longer) have a reinvestment intention, he will add the HIR to the taxed profit. Keep recording the continuation of your reinvestment intention at the end of each year until you make the reinvestment. If the reinvestment is delayed, keep the documents proving the existence of a special circumstance.
3. Take advantage of forgotten investment deductions
In principle, entrepreneurs who invest may deduct their depreciation costs. Furthermore, under certain conditions, an investment entitles an additional deduction: the investment deduction. The investment deduction takes three forms: the small-scale investment deduction (KIA), the energy investment deduction (EIA) and the environmental investment deduction (MIA). You may have forgotten to claim the investment deduction in your 2017 income tax return. In that case, you can still apply to the inspector in 2022 for an ex officio reduction for that investment deduction. However, this is the last year in which you can still request an ex officio reduction for 2017.
For assessments imposed on or after 1 January 2023, any decision, the amount of which is or should have been stated on the assessment notice of the assessment, counts as part of the tax assessment. As a result, you do not need to file a separate request for an ex officio reduction related to the order.
4. Arrange KIA for 2022
Do you want to make additional investments in business assets in 2022? Then realise that the small-scale investment deduction (KIA) will expire if the investments entitling you to KIA this year exceed € 332,994. If there is a risk of exceeding this amount, it is better to postpone the investment until 2023. The investment is allocated to the year in which you enter into commitments. Entering into obligations might include placing an order, agreeing to an offer or signing a purchase contract. If you produce an asset yourself, then it revolves around the year in which you incur the production costs.
Is your company part of a vof or other partnership? Then look at the total investment of the vof and not the investment of each individual partner to determine the KIA.
5. Make timely down payment for KIA
If you make investment commitments for an asset before 1 January 2023, you may apply the small-scale investment deduction (KIA) on it in 2022. In principle, this is subject to the condition that you have paid for and put the asset into use in 2022. But what if you have not yet used the asset in 2022? And the investment deduction initially exceeds the amount you paid for that investment at the end of 2022? Then your KIA will be limited to the amount you paid in 2022. The excess is deductible as KIA in 2023. Do you still want to take full advantage of the KIA in 2022? Then make a down payment so that the total payment in 2022 for the investments is at least equal to the amount of the KIA for that year.
6. Sell ‘new’ assets in 2023
Are you considering selling business assets that you bought in 2018, and have you received investment deductions on the then investment in these assets? If so, try to postpone the sale until after the turn of the year. Otherwise, you will run into the disinvestment addition. This means that you will have to repay part of the investment deduction. The disinvestment addition is at most the investment allowance enjoyed at the time. The disinvestment addition can be omitted if you sell the business assets for a maximum of € 2,400.
The disinvestment addition also occurs for other forms of disposal. If you transfer an asset to your private capital, this constitutes a fictitious disposal. In such situations, the tax authorities take the fair market value of the asset as the transfer price.
7. Start early with an application for the Environmental List 2024
Are you investing in a product that is not yet on the Environmental List 2023? But do you think it should be on the Environmental List 2024? From 1 January 2023, you can submit a proposal to that effect via RVO.nl. This is because the proposal form will be available from that date. Towards the end of the year, the new Environmental List will be published in the Government Gazette and on the RVO website. Four weeks after publication, the RFO contacts those who have submitted a proposal. If the proposal is rejected, the RFO provides a justification.
It is important to have additional information available about your proposal. This could include professional literature and documentation material. In addition, you can already check which bodies can give you more information about your proposal.
8. Report special investment in time
Have you recently invested in a business asset included in the Energy list 2022 or the Environment list 2022? If so, report this via RVO.nl within three months of entering into the investment commitment. Otherwise, you may not apply the energy investment allowance (EIA), the environmental investment allowance (MIA) or the early depreciation on environmental investments (Vamil).
You may not apply both the EIA and the MIA on the same investment.
9. Apply for WBSO 2023 quickly
You can reduce the (labour) costs of your research and development project in 2023 by claiming a so-called concession under the WBSO. Do you employ personnel? Then apply for this concession no later than 20 December 2022! Are you a self-employed person without staff (zzp’er)? Then you have until 1 January 2023 to apply for a WBSO allowance for the year 2023.
10. On to the 1,225 hours!
As an entrepreneur, you may be entitled to various entrepreneurial income tax credits. Think, for example, of the entrepreneur deduction and the possibility to add to the old-age reserve. To benefit from these facilities, you must meet the so-called hours criterion. This means that in 2022, you must spend at least 1,225 hours on your business. This can be made plausible with a timesheet. In doubt as to whether you have worked enough hours for your business? Then make some extra hours so that you do reach the 1,225 hours.
In case of a break due to pregnancy, the hours the entrepreneur would normally have worked in the 16 weeks surrounding the birth still count.
11. Make final allocation to retirement reserve
If you are an IB entrepreneur, you can defer taxable profit taking by adding to the retirement reserve under certain conditions. In principle, you do so for 9.44% of the profit, but a maximum of €9,632 (figures 2022) or the amount by which the company assets at the end of the year exceed the retirement reserve at the beginning of the year. As of 1 January 2023, the FOR will be abolished. You will then no longer be able to allocate to this reserve, but your existing reserve will be settable under the current rules. So an endowment in 2022 can certainly still make sense.
To add to the retirement reserve, you must meet the hours criterion in 2022. In addition, you must not have reached retirement age at the beginning of 2022.
Also look at the rate at which the addition is deductible. If you later have to settle the retirement reserve at a higher rate than the rate at which the addition is deductible, it is better to forgo the addition.
12. Wait with additional job until after the turn of the year
To meet the hour criterion, which gives access to various tax breaks, you must also spend more than 50% of your total working time on your business. As a result, it may be better not to spend too much time now on other work (e.g. ‘side jobs’ in employment) that yield less than the tax breaks.
The 50% requirement is disregarded if you were not an entrepreneur in one or more of the previous five calendar years and applied the self-employed deduction at most twice in that period.
13. Award partner’s allowance only from 2023
Has your partner performed at least 525 hours of labour for your business this year without receiving compensation for it? And do you still want to grant your partner a work allowance? Wait with that until after 2022. In that case, you can still use the cooperation deduction this year. The co-deduction is 1.25% of the profit if your partner has worked at least 525 hours but no more than 875 hours in your company. For a higher number of hours, the deduction increases to a maximum of 4% of the profit. This maximum applies if your partner works at least 1,750 hours in your business. Incidentally, certain forms of profit, such as cessation profit, do not count towards the calculation of the co-work deduction.
The advantage of granting an employment allowance is that it is deductible. However, an employment allowance of less than €5,000 to your partner is neither deductible nor taxable to your partner. So calculate what is most advantageous. Pay attention to the effects a higher or lower income can have on tax credits and allowances.
14. Meet family debt for investment
In principle, as an entrepreneur, you may not apply an investment deduction for obligations entered into with relatives by blood or marriage in the direct line or persons belonging to your household. Through your tax return, you can request the tax authorities to waive this restriction. An important condition is that these are real obligations. Furthermore, in principle, you must not have entered into the investment to affect the investment deduction percentage. The inspector will apply the disinvestment addition if you do not fulfil the obligation towards the relative by blood or marriage. The same applies if the obligation changes within five years of the start of the calendar (financial) year in which you entered into the obligation. Therefore, if you entered into such an obligation in 2018, you must pay the interest and principal due before 1 January 2023. If you cannot, make a plausible case that the deviation from what was agreed is at arm’s length.
15. Set off IB losses from 2013
Did you suffer a tax loss with your IB company in 2013 that you have not yet fully offset? If so, do not overdo tax profit deferral this year. For example, you can forgo an addition to the retirement reserve. Or you can try to release a taxable book profit on an asset. To the extent that you do not set off the 2013 loss against 2022 profits, this loss is no longer deductible as of 1 January 2023.
16. Make haste with your move
Have you relocated your business around 1 January 2021? And are you currently in the process of moving so that you can live closer to your work? If so, complete the move quickly. This way, you will secure the tax deduction for moving due to a business. You may set the deduction at the amount of the cost of moving the household effects plus €7,750. According to the Tax Office, under the following circumstances, in any case there is a relocation due to business. First, the distance between your home and your work must have been at least 25 kilometres before the move. In addition, the distance from your home to the workplace of your enterprise must have decreased by 60% or more. This decrease must take place within two years of the relocation of your enterprise.
The wording of the Inland Revenue’s concept of ‘relocation due to the enterprise’ implies that you may be able to prove by other means that you moved due to your enterprise. However, you will then have less certainty.
COMPANIES AND DGA’S
17. Save tax interest with VA Vpb
The tax authorities charge interest on a 2021 corporation tax assessment imposed after 1 July 2022. This interest has been 8% per annum since 1 January 2022. Compared to the interest the bank pays you, this interest is high. You can reduce tax interest by applying for a provisional corporate income tax assessment 2021 as soon as possible. Do you expect your PLC to have to pay additional corporation tax for 2021? Have the tax authorities issue a provisional assessment as soon as possible.
If you do not pay a 2021 tax assessment on time, the Tax Authorities will also charge collection interest. This interest is in addition to the tax interest. By the way, from 1 July 2022 to 31 December 2022, the recovery interest is only 1% per year due to the effects of the corona virus. After that, the recovery interest will go up again. Thus, recovery interest will be 2% as of 1 January 2023 and eventually reach 4% as of 1 January 2024.
18. In claim against bv after 1 January 2023
If you want to collect a claim on your PLC, wait to do so until after 1 January 2023. That way, you avoid the amount of money you receive falling immediately into the yield basis of box 3 for the year 2023.
The matter is more complicated if you have granted a loan of up to three months from your private assets. The Inland Revenue applies the following sanctions in such a case. Firstly, the inspector attributes the claim to your box 3 assets. At the same time, the benefit from posting is taxed in box 1. These sanctions can also come into play if the posting lasted more than three months but not more than six months. But in this situation, you can avoid the double taxation if you make it plausible that more than 50% of your actions were based on business considerations.
19. Look for most comparable employment
Under the customary pay rules, a DGA is deemed to receive a minimum salary. Initially, that minimum is the highest of the following three amounts: 75% of the salary of the most comparable employment, the salary of the most earning employee in the bv (or group) or a fixed amount of €48,000 (amount 2022). If the BV proves that 75% of the salary of the most similar employment is lower than the salary of the highest-earning employee, the usual wage is equal to that 75% of the salary of the most similar employment. However, the minimum is €48,000 (amount 2022) or 100% of the salary of the most comparable employment, whichever is lower. The plan is to abolish the 25% efficiency margin in this rule from 1 January 2023, so that the wage must be 100% of the wage of the most comparable employment. So it remains important to know what the most comparable employment is. Find this out in time, so that your PLC can pay you a tax allowable wage. This reduces the risk of retrospective tax assessments.
The customary pay rule does not apply if the customary pay would amount to an amount of at most €5,000.
20. Dga, let your PLC increase your salary
Due to the expiry of the efficiency margin, it is possible that the Tax Authorities will take the position that many PLCs have to increase the wages of their DMSs. This will be especially true if the dga has a salary that exceeds the fixed minimum customary wage of €48,000 (amount 2022). In such situations, the tax inspector could argue that the PLC grants its dga a salary equal to 75% of the most comparable employment. In that case, the tax authorities will want to increase the customary wage by a third before 2023, so that the customary wage becomes equal to the wage of the most comparable employment. If your PLC increases your salary in time, it may be able to avoid retrospective income tax assessments.
Of course, it is possible that your wage is already much closer to the wage of the most comparable employment than 75% of that wage. In that case, the increase in your wage may be much lower or even omitted. But do bear in mind that you may then have to make a plausible case.
21. Start an innovative start-up this year
A private limited company with an enterprise that qualifies as an innovative start-up may set the customary wage for its managing director at the minimum wage for up to three years. This does not require consultation with the tax authorities. This rule will expire on 1 January 2023 for new cases. If you were planning to start such an innovative start-up, do so this year!
Consult with the inspector to set a customary wage that takes into account your company’s financial position.
22. Set off losses before change of interest
Corporate taxpaying entities can offset losses incurred against profits earned. A loss can be set off against the previous year’s profits and profits of subsequent years. Does a year see a change in the ultimate interest of the BV of 30% or more compared to the oldest year from which a loss is offsettable? In principle, losses incurred before this change of interest cannot be set off against profits realised after the change of interest. However, there are exceptions to this restriction, for example if the bv could not have known about the change of interest and the change in interest is not unusually large. If you do already have plans to transfer a large part of your interest in your bv to a third party, loss evaporation may be imminent. In such a situation, release a provision or tax reserve. Or sell assets with hidden reserves to an affiliated company. Instead of an ordinary sale, a sale/leaseback may be possible.
Since 2022, loss relief per year is limited to €1 million plus 50% of the profit to the extent it exceeds €1 million.
23. Wait to divest operations
In principle, if the ultimate interest in a BV with offsettable losses changes by more than 30% compared to the oldest open loss year, a restriction on loss relief is imminent. This limitation may be waived with regard to losses incurred in a tax year in which the assets of the bv did not consist largely of investments for at least nine months. In addition, it is important that immediately prior to the change of interest, the activities of the bv have not decreased to less than 30% of the combined size of the activities at the beginning of the oldest year in which offsettable losses were incurred. Nor must there be, at the time of the change of interest, an intention to still reduce the bv’s operations so significantly within three years.
24. Drop BV profits in 2022
Although it can be difficult to bring forward a company’s profits for tax purposes, it may be beneficial to try to do so anyway. This is because as of 1 January 2023, the first corporate tax bracket will shrink from €395,000 to €200,000. Your PLC will therefore reach the high rate of 25.8% sooner.
As of 1 January 2023, the low corporate tax rate will increase from 15% to 19%.
25. Take advantage of ab tax credit before 2023
Suppose you no longer have a substantial interest (ab) in 2021 and 2022, but still have an outstanding loss from ab. Then convert this loss into a tax credit still in 2022. The tax credit is 26.9% of the outstanding ab loss. If you convert your ab loss into a tax credit in 2022, you may deduct this credit from the income tax on box 1 income from 2022 to 2029. However, note the year in which you incurred the relevant ab loss. The tax credit no longer applies if the ab loss is older than nine years.
26. Check benefit of mortgage with bv
You may have the option, like some other DMSs, to take out the loan for your own home from your PLC. In that case, you have more control over the loan conditions than owner-occupiers who have a mortgage with a third party. Loan conditions affect the qualification of owner-occupied home debt. For example, a repayment-free mortgage does not in principle fall in Box 1, but in Box 3. A mortgage in box 1 results in mortgage interest being deductible in box 1 at the progressive rate. Incidentally, the maximum deduction will be at a rate that increasingly approaches the rate of the second bracket. In 2022, the effective rate at which mortgage interest is deductible will be a maximum of 40%. In Box 3, the mortgage yields a return of negative 2.46% (rate 2021, rate 2022 not yet known), assuming the debt threshold of €3,200 per tax partner has already been used. Depending on the circumstances, it may be fiscally beneficial to leave the mortgage in box 3.
Do you have a pre-2013 loan or a loan to which the pre-2013 regime applies? Then it is not possible to transform an owner-occupied home debt into a box 3 debt. Indeed, with such loans, you can agree not to have to repay during the term. In that case, such a mortgage does not fall into box 3.
The government hopes to introduce a new system for box 3 in 2026, possibly based on actual returns. Take this into account if you do not expect to have repaid the mortgage before then.
27. Consider refinancing loan bv
This year, the House of Representatives passed the Excessive Borrowing from Own Company Act. This law will enter into force on 1 January 2023. If you owe more than €700,000 to your PLC on 31 December 2023, the excess is in principle a notional profit distribution. You will have to pay tax on that profit distribution. Have you privately financed property, other than your own home, with a loan from the bv? And do you owe more than €700,000 to the bv? If so, consider refinancing the debt for the property with a loan from the bank. Arranging a refinancing can take some time. Start this on time. You may also be able to take advantage of the current relatively low interest rates.
An alternative to refinancing the property is selling the property to your PLC. Bear in mind that this will cost 8% transfer tax in 2022. In 2023, this rate will be 10.4%.
28. Chart your debts to your PLC
Because of the introduction of the Excessive Company Loans Act, it is useful to map out your debts to your PLC in good time. Do not forget to include your partner’s debts to your PLC! To the extent that the joint debts exceed € 700,000, the tax authorities may take this into account as a notional profit distribution. It is important to note that home equity debts are not part of the debts for application of this rule if a right of mortgage has been granted to the bv.
Home equity debts that already existed on 31 December 2022 do not count anyway, even if no right of mortgage has been granted to the bv.
29. File bv’s annual accounts on time
Make sure your PLC files its annual accounts on time. This is especially important in situations where bankruptcy is imminent. In that case, as director, you risk being held jointly and severally liable for the debts of the bv that cannot be settled through liquidation. Filing the annual accounts with the Chamber of Commerce (CoC) must take place no later than eight days after adoption of those annual accounts. Furthermore, filing must take place no later than 12 months after the end of the relevant financial year. Thus, the latest filing date for the financial year 1 January 2021 to 31 December 2021 is 31 December 2022. Worried that you won’t make it to file the annual accounts on time? If so, you can file provisional annual accounts if necessary.
If all shareholders are also managing or supervisory directors, there is less time for filing financial statements. Even if the maximum five-month extension has been granted for preparing the annual accounts (the normal period is five months), you must file the annual accounts for the financial year 1 January 2021 to 31 December 2021 no later than 8 November 2022. By the way, articles of association may have derogated from this legal rule!
Do you really fail to file the annual accounts on time and are threatened with bankruptcy? Then you still have a way to avoid liability. Although as a director you are deemed to have performed your duties improperly, you are not liable if you can make it plausible that your improper management was not a major cause of the bankruptcy. However, it is then important, as far as certain taxes such as payroll tax and turnover tax are concerned, to make a timely notification of insolvency.
30. Stop tax debts in bv
Claims from loans to third parties are assets that are taxable in box 3. But (large) tax debts are not deductible in box 3. Suppose you let your bv take over the receivables and tax debts you have. In that situation, a set-off of the receivables and debts takes place. To the extent that the debts are greater than the receivables, you will acquire a debt to your bv. But this debt does qualify as a box 3 debt, for which a separate negative flat rate return applies. This allows you to save box 3 tax. Of course, the transfer of the receivables and tax liabilities must then take place before the reference date of 1 January 2023. Do you have assets and debts in box 3? Then consider acquisition of these assets and debts by your PLC.
If, on balance, a claim arises against your bv, this claim falls under the provision scheme. As a result, you will have to pay tax on the interest in Box 1. Calculate whether this is desirable. If not, transfer only part of your receivables!
31. Complete liquidation in 2022
A holding company can in principle deduct the loss from the liquidation of a company in which it has a shareholding. But this deduction is limited to €5 million. The deduction limitation is waived if, at the time just before the completion of the liquidation of the assets of the dissolved company, the holding company has such an (indirect) interest in that company that it can determine the activities of that company. In addition, the dissolved company must be incorporated in the Netherlands, another member state of the EU or EEA or in a designated state. In principle, the holding company must continuously meet the aforementioned conditions during the five-year period immediately preceding the completion of the liquidation.
32. Employ business successor in 2022
If you, as a director, gift the shares in your PLC to your children or another business successor, this will in principle lead to a tax settlement. This is because the fair market value of the shares minus your acquisition price is then taxed. Under conditions, this tax claim can be passed on. One of the conditions is that the acquirer had already been employed by the BV for at least 36 months before the donation. This condition requires preparation. Are you considering gifting the shares in your PLC to your children or business successor on 1 January 2026? If so, employ them in your bv no later than 31 December 2022.
The business succession scheme in inheritance and gift tax is now under a lot of pressure. CBS, for example, has concluded that this facility is not efficient. Whether this also applies to the business succession facility in income tax is hard to say. In any case, the finance minister has already announced his intention to exclude leased property from the favourable business succession and pass-through scheme in due course. This argues in favour of arranging the business transfer in good time.
33. Only withdraw from VBI after 2022
Do you hold a substantial interest in an exempt investment institution (VBI)? If so, the inspector will in principle calculate a notional regular benefit of 5.53% (percentage 2022) over the fair market value of the shares at the beginning of the year. You may reduce this notional regular benefit by the amount you actually received in dividends. But the lump-sum regular benefit may not become negative as a result. Do you think the standard return is too high? Dispose of your shares in the VBI after 1 January 2023 and start investing in box 3. If you dispose of your interest in the VBI after the reference date for box 3 in 2023, the proceeds for 2023 will not yet end up in the return base. However, the lump-sum benefit from the VBI must be calculated time-proportionally. But this amount of the lump-sum benefit is not too bad, as it only relates to a short period.
Do you transfer your assets again from box 3 to the VBI within 18 months? Then a penalty takes effect. The inspector will then tax the (fixed) income from the relevant assets in both box 2 and box 3. If you are considering transferring assets from your VBI to box 3, check whether you meet the aforementioned eighteen-month deadline.
You have the opportunity to provide rebuttal evidence. The penalty does not apply if you make it plausible that you are transferring the assets back to box 3 within eighteen months for business reasons.
34. Concealed tbs from 2019 in 2020? Report that in 2022
Did you make one or more assets available to your PLC, but did not include the consideration for them in your Box 1 income? Report that as yet using the voluntary disclosure scheme. If you submit the request to apply the voluntary disclosure scheme within two years of the tax return in which you concealed the income, no fine will be imposed. If you turn in later, the inspector will reduce the fine to 60% of the maximum fine he can impose if you do not turn in at all. Avoiding the fine is not possible insofar as you have concealed income from substantial interest or from savings and investments.
35. Check transfer prices
Does your company purchase goods or services from affiliated entities abroad or perform services for affiliated foreign entities? If so, your company and the affiliated entity must apply arm’s length transfer prices. Bear in mind that the tax inspector will not allow a reduction in taxable profit without this being offset by an increase in the tax base abroad. Therefore, check whether the transfer prices applied to foreign group companies this year are problematic under this provision.
36. Arrange dollar returns on time
Do you want to file your corporate income tax return in a currency other than the euro from 2023, such as the dollar? If so, apply for a Functional Currency Arrangement Order from the Tax Administration before 1 January 2023. If the inspector issues such a decree, you are in principle bound by this choice for a period of 10 years.
37. Distribute interest on deposits in 2022
In principle, you have to withhold dividend tax on dividends paid on shares and profit-sharing certificates, as well as on remunerations for money loans that act as equity. By mistake, this withholding obligation did not apply to interest on deposits of a cooperative, interest on shares in a mutual insurance company and other remunerations for capital provision by founders, shareholders, members, and so on. This error will be corrected by 1 January 2023. This may be a reason to grant a capital allowance this year.
38. Prepare request for CIS
BVs and NVs liable to withholding tax on dividends can in principle request a decision from the inspector determining the amount of paid-up capital. This possibility does not currently exist for holding cooperatives and mutual account funds (CISs). However, from 1 January 2023, it will in principle be possible to submit such a request for the FGR and other companies with capital divided into shares. So you can start preparing your request now.
VAT AND TRANSFER TAX
39. Correct VAT car in 4th quarter 2022
If VAT was invoiced to your company in 2022 in connection with the purchase, maintenance and use of the business car, this VAT is deductible as input VAT. At least, as long as you(w business) used the car for taxed turnover. Did you use the car partly for private purposes in 2022? Then apply an adjustment for this in your last VAT return of 2022. Those who have not kept records of actual private use may assume 2.7% of the list price (including VAT and bpm). For certain cars, including cars used in the company for five years, you may apply a flat rate of 1.5% of the list price (including VAT and bpm).
Commuting counts as private use for VAT purposes.
40. File timely VAT supplementary return
It is advisable to regularly check the accuracy of your VAT returns based on your records. Do you notice while checking your VAT returns that you have paid too much VAT? Then correct the amount of VAT overpaid via a supplementary declaration. You can do this for both 2022 and the five previous years.
You do not need to use the supplementary declaration if the correction amounts to no more than €1,000. In this situation, you may in fact process the correction in your next VAT return. The same applies to a correction of up to €1,000 of underpaid VAT.
41. Process BUA correction in final tax return 2022
You may have deducted VAT on expenses for corporate gifts or employee benefits in 2022. If so, check whether you benefited one or more members of staff by doing so for more than €227 (excluding VAT). In addition, check whether you have favoured one or more relations for more than €227. If at least one of the two situations occurs, you must correct the deducted VAT in the VAT return for the last period of 2022 and still pay it. This is also known as the BUA correction (BUA: Sales Tax Exclusion Decree).
The BUA rule does not apply to company bicycles. In addition, separate rules apply to the deduction of VAT on costs of food and drink provided to staff.
42. Issue 90% statement before 28 January 2023
Did you buy a property in 2021, opting together with the seller for a VAT-taxed supply? Then issue the 90% statement to the seller and the tax authorities within four weeks after the end of the financial year following the financial year of delivery (i.e. before 28 January 2023). In this statement, state whether you use the immovable property for purposes for which you are at least 90% entitled to deduct VAT. Do you no longer meet the 90% criterion in the first financial year or in the following financial year? Then the tax authorities state that the supply is still exempt from VAT with retroactive effect. For the seller, this means that the right to VAT deduction lapses. In that case, he must therefore repay the pre-deducted VAT to the tax authorities. If you no longer meet the 90% criterion in a later year, you must review your VAT deduction in the usual way.
The purchase agreement may stipulate that you must (partially) compensate the damage suffered by the seller.
43. Agree on VAT loss on delivery of property
Are you selling a property yourself? And do you opt for VAT-taxed delivery? In that case, include clear agreements in the purchase agreement about possible VAT losses in case the option for VAT-taxed delivery expires. For example, you can stipulate that the buyer will compensate you for the VAT loss if he no longer meets the 90% standard.
44. Apply for KOR before December 2022
Does your annual turnover not exceed €20,000 (excluding VAT)? If so, you can opt for the small entrepreneurs scheme VAT (KOR). The advantage is that you do not have to charge VAT to customers. You also do not have to submit VAT returns. Opting for application of the KOR applies for a period of three years. You must apply to the tax authorities no later than four weeks before the start of the period in which you want to apply the KOR. Do you want to apply the KOR as of 1 January 2023? Then apply to the Tax and Customs Administration before 1 December 2022.
Applying the KOR makes you a VAT-exempt entrepreneur. This means that you can no longer reclaim VAT on your purchases. Are you making large investments in the short term? Then applying the KOR could be disadvantageous. You can then no longer reclaim the VAT on the purchase. If you apply for the KOR in the period after investment, you may also have to repay a large part of the VAT received.
45. Start work for operating company in 2022
Suppose your holding company has an operating company that carries out VAT-taxed activities. Now your holding company wants to start actively managing this operating company. It may then be fiscally advantageous as a DGA to perform management activities for the operating company directly on behalf of your holding company. This way, you make it clear that your bv is a so-called tired holding company. As a result, it is entitled to deduct input VAT insofar as the services purchased were used for VAT-taxed activities. If you do not manage to carry out any work for the operating company this current VAT period, try to do so in the new tax period.
If a tired holding company provides VAT-taxed (management) services to a company, it can deduct the VAT on the purchase and sale costs of a majority stake in this company on a pro rata basis.
46. Reclaim VAT on 2021
Have you been waiting a long time for a payment from a debtor? Then realise that, as a creditor, you are entitled to a VAT refund no later than one year after a debt becomes due. You may reduce the periodical VAT return by the amount of the refund. You do not have to submit a separate request to the tax authorities. Have you had a receivable from a debtor for a year? Then reclaim the VAT.
Should the debtor pay the irrecoverable claim at a later date, pay the previously deducted VAT again on your tax return.
47. Report small imports in I-OSS
Have you, as a VAT entrepreneur, purchased goods originating from non-EU countries with a value of up to €150? If so, you can report this in an import OSS declaration (I-OSS). In doing so, the import of goods from non-EU countries is exempt from VAT. Incidentally, this arrangement also applies to Norwegian VAT entrepreneurs and non-EU VAT entrepreneurs with a representative in the EU. If you participate in the I-OSS scheme, you will receive a special VAT identification number. You must provide this number to customs for the VAT exemption of imports. As a VAT entrepreneur, do you receive goods originating from non-EU countries with a value of up to €150? If so, report these in an import OSS declaration.
48. Apply for an FE VAT decision in time
Sometimes VAT entrepreneurs, whether natural persons or bodies, are so intertwined financially, organisationally and economically that they form an entity. In that case, they form a fiscal unity for VAT purposes. In that case, these entrepreneurs may request the tax authorities to consider them as a single entrepreneur for turnover tax purposes. In that case, the inspector may issue a decree specifying the date from which he will classify the VAT entrepreneurs as a fiscal unity for turnover tax purposes in any case. Now, in principle, it is the factual circumstances that determine when the fiscal unity takes effect, but it does simplify matters if one applies for the order in time. That way, there is no need to dispute the moment (e.g. at the beginning of the next tax period) when the fiscal unity takes effect for turnover tax purposes.
The fact that different VAT entrepreneurs submitted separate VAT returns for a tax period does not exclude the possibility that they already formed a fiscal unity for turnover tax purposes in that period.
49. Reconcile administrations
At the end of 2022, check the reconciliation of payroll and financial records as soon as possible. This is important, for example, if one or more (taxed) allowances paid out were inadvertently not processed in the payroll records. No payroll taxes were then paid on these allowances. When making the reconciliation between the payroll and financial records, such discrepancies come to light. You can then still pay the payroll taxes due. This can be done in the form of final tax under certain conditions.
50. Allow low-wage employees to work 1,248 hours
Employers who employ workers with the minimum wage or slightly above it are entitled to the low-income benefit. These are workers earning between €10.73 (lower limit) and €13.43 in 2022. The allowance is €0.49 per hour with a maximum of €960 per employee. Your employee must have a minimum of 1,248 paid hours per calendar year. If your employees meet the conditions, the UWV will pay the benefit to you during 2023. Not quite sure if certain employees will get more than 1,248 hours of paid hours? Try to schedule those employees extra, so that your company gets to the minimum number of hours.
51. Take advantage of labour cost benefits
Take advantage of wage cost subsidies for workers aged 56 and above or disabled workers. If you employ the aforementioned workers, you may get a labour cost subsidy. You may also be entitled to a labour cost subsidy for disabled employees whom you redeploy and for employees from the target group of the job agreement and training impediments. The amount of the subsidy depends on the employee category to which your employee belongs. However, the subsidy amounts to a minimum of €1.01 per hour worked and a maximum of €3.05 per hour worked. The subsidy is capped at €2,000 for an employee from the target group of the job agreement and training impediments, and at €6,000 for the other category of employees. To qualify, you should ask your employee for a copy of the target group declaration. In principle, your employee must request that statement within three months of starting employment.
52. Check remaining free space
Because of the current labour market shortage, it may now be particularly interesting to make the most of the free space under the work-related costs scheme. Therefore, check what free space you still have left. In 2022, the free margin is 1.7% of the total wage bill up to a maximum amount of € 6,800. To this you may add another 1.18% of the total wage bill, insofar as this exceeds € 400,000. If you find you still have free space left, you can use it by, for example, sending a nice Christmas package to your employees this year. Incidentally, the free room over the first €400,000 will temporarily increase from 1.7% to 3% in 2023. From 1 January 2024, the free room over the first €400,000 will decrease from 3% to 1.92%. An increase of 0.22%-point is therefore structural.
Check whether calculating the free space per group entity (group scheme) is more favourable.
53. Pay out usual bonus in 2022
Do you still have free space left at the end of 2022? And are you considering giving a bonus to one or more employees? Then let this bonus fall into the free space. A condition is that you pay the bonus in 2022. Also important: the customary use criterion must be met. This means that the bonus may not differ by more than 30% from what is customary for similar employees in the same sector.
In any case, the Ministry of Finance approves a bonus of up to €2,400 per employee per year. Providing proof or substantiation is therefore not necessary in that case. Are you a director and are there enough free space? Then you may also grant yourself a bonus of €2,400.
Do you want to apply a higher bonus? Then provide proof that such a bonus is customary in your sector.
54. Let your employee buy from you
If your company sells products that are also popular with your employees, give them a discount on the products they buy from you. The discount is untaxed for your employees if the products are not industry-specific. Moreover, the discount is untaxed only insofar as it is not too high. To the extent the discount per product exceeds 20% of the fair market value of that product or together with other discounts granted exceeds € 500, the excess is taken into account as taxable wages. If necessary, you can designate this surplus as final taxable income and then charge it to your tax-free allowance. As a result, no tax will still be due on it. You may also apply this scheme in respect of former employees whose employment ended due to retirement or incapacity for work.
55. Agree on working from home
Since 1 January 2022, employers may pay untaxed home working allowance to their employees. This is a tax-free allowance of up to €2 per homeworking day. This may also be a fixed allowance according to a structural homeworking pattern. As an employer, you can give either the untaxed homework allowance or the untaxed commuting allowance per day. If you have not yet granted the homework allowance in 2022, see if you can still do so in 2023. If necessary, start consulting your employees in advance.
If more employees start or continue to work from home, your company will probably need less office space. If your company rents an office building, it may be able to agree with the landlord on a downsizing of the rented space to reduce rental costs. If your company has its own office building, it could rent out the redundant space and thus generate rental income.
56. Set up an employee fund before 2023
Do you want to support your employees during financially tight times or setbacks by providing benefits and allowances to them? If so, it may be interesting to set up an employee fund before 2022. This is because payments and benefits in kind from such a fund are untaxed under certain conditions. An important condition is that the employer’s contribution during the last five years does not exceed the total contribution of the combined employees during that period. If the fund has been in existence for less than five years, the contributions during the fund’s existence must be compared. You must deduct the employees’ contributions from their take-home pay.
If you still set up an employee fund in 2022 and deduct the employee contribution from your employees’ thirteenth month or year-end bonus, for example, you can also make a contribution yourself. Then you can already support your employees in 2022.
57. Hold staff party 2023 on company premises
Do you want to organise a staff party in early 2023? Then organise this party at the workplace. A staff party planned in early 2023 can remain untaxed under the work-related costs scheme if you organise the get-together at the workplace. This facility covers both the drinks and snacks (not business meals) consumed by employees and the costs of entertainment, for example. Should you nevertheless opt for an external location, the staff party and the refreshments will be taxed as final salary. And at invoice value. Of course, you can use the tax-free allowance for this. But then you will be using up this space early in 2023.
The consumptions provided at the workplace are also untaxed for employees of other branches, locations or offices and for employees of other employers with whom you apply the group scheme.
58. Beware of the group scheme in 2022
If your company forms a group with at least two group entities, it may be convenient to apply the group scheme. In that case, you no longer have to split the allowances and benefits in kind to employees of more than one group unit. You can apply the group scheme if the shareholding is at least 95%. If two or more foundations are so financially, organisationally and economically intertwined throughout the calendar year that they form a unit, they are also a group. In 2022, you have a free allowance of 1.7% for the first €400,000 fiscal wage bill, above which 1.18% applies. If the group scheme is applied, you can use the 1.7% margin only once. Without application of the group scheme, you have 1.7% free room for each company over the first € 400,000 taxable wage bill. Therefore, assess whether application of the group scheme is advantageous for you.
Did you apply the group scheme in 2022, but is it disadvantageous in retrospect? If so, you can opt not to apply the group scheme in 2022 at the latest when filing the tax return for the second period of 2023.
59. Check whether the sector classification for 2023 is correct
At the end of 2022, you will receive a decision from the Tax and Customs Administration with the sector classification and the contributions for the work resumption fund for 2023. Check whether the sector classification matches your company’s activities. Indeed, if you are classified in the wrong sector, this could have major financial consequences.
60. Complete payroll closing 2022
The end of the year is approaching, so it is almost time to close the payroll for 2022. Tackle this energetically. In any case, the closure should take place before you have to submit the payroll declaration for the last period of 2022. When closing, make sure you have a copy of each employee’s identification document. Also make sure you have in order all invoices of benefits in kind and provision to employees and declarations of expenses reimbursed to employees.
61. Check records of agency workers before 2023
Do you use temporary, seconded or other employees within your company who are not employed by your company? Then check before the end of 2021 that your administration regarding these employees is in order. For example, you must have checked the identity of all such employees. As you are not allowed to ask temporary workers for a copy of an identity document, it is advisable to note down the type of identity document, its number and period of validity during the check. In addition, you must keep a record of how much salary and holiday allowance they have received as well as the number of hours they have worked.
You must also check the registration of the employment agency. Do you fail to meet this obligation? Then the Dutch Labour Inspectorate can impose a fine of, in principle, €8,000 per employee (for employers who are natural persons, the fine is, in principle, €4,000) in the event of an inspection. These fines can even be two or three times higher for repeat offences!
62. Terminate temporary contract before 1 December 2022
Are there temporary employment contracts in your company that expire on 31 December 2022? If so, let the employee know in writing before 1 December 2022 whether or not you are extending the temporary employment contract. This so-called one-month notice obligation applies to temporary contracts of at least six months. If you do not give (timely) notice, the employee can claim damages of up to one gross monthly salary. If necessary, record when contracts expire for the whole of 2023 and set a reminder in your diary to give you two to three months’ notice.
By sending the notice by e-mail with acknowledgement of receipt, you can prove that you gave the notice in time. However, other means of proof are also allowed, such as a registered letter.
63. Form provision for transition compensation
Nowadays, an employee is usually entitled to a transition compensation upon dismissal. That transition compensation amounts to 1/3rd monthly salary per year worked. The compensation is a maximum of €86,000. If your employee’s annual salary exceeds €86,000, the transition compensation for your employee is capped at the gross annual salary. Formation of a provision for transition compensation is possible under certain conditions. The expenditure originates in facts and circumstances that occurred in the period before the balance sheet date. The expenditure must also be attributable to the period before the balance sheet date. It is also important that there is a reasonable degree of certainty that the expenditure will be incurred. In particular, to form a provision, it will have to be shown that there is a reasonable degree of certainty that a transitional allowance will become payable in the future. In this context, consider a reorganisation or restructuring. Are you in discussions with an employee because of his poor performance? Then form a provision if a dismissal is inevitable. Are you making a provision for a future transfer compensation? Record your justification for this properly.
64. Adjust your return period before 14 December 2022
You may want to use a different return period for payroll taxes in 2023. For example, because you will now pay wages every four weeks. In that case, change the payroll tax return period. To do so, you must send the Tax and Customs Administration a completed form ‘Change of payroll tax return period’. In this form you request a change of the tax return period. This form must be received by the Tax and Customs Administration no later than 14 December 2022. If the inspector receives the form later, you cannot use a different return period until 2024.
65. Shift intra-group withholding obligation before 1 January 2023
Does your group have one or more foreign group divisions? If so, the Dutch group entity can relieve the foreign group entities of a lot of administrative hassle if it agrees to shift the withholding obligation to the Dutch group entity. To do so, submit a joint request to the Tax and Customs Administration before 1 January 2023.
66. Obtain an A1 certificate quickly
Do you employ employees who work in the Netherlands but live abroad? Then the question is in which country these employees are insured for social insurance and whether you have to deduct and pay social contributions for them. You can get certainty about this from the social security agency of the country of residence (in most cases Germany or Belgium) by applying for a decision indicating which statutory social security system applies. This decision is known as the A1 declaration. Usually, an A1 declaration is valid for 12 months. Therefore, you should apply for a new decision every year. The end of the year is an appropriate time to take stock of when current declarations expire. Make an overview of this. Should one or more declarations expire on 31 December 2022, apply for a new decision in 2022 if you want to be sure in 2023 as well whether or not the employees concerned are insured in the Netherlands for social insurance.
67. Renew work permits before 2023
If some of your employees have an EU or EEA nationality, you must have a work permit or a combined residence and work permit for these employees. These permits are issued for a specific period and usually expire at the end of a calendar year. It is therefore advisable to check as soon as possible whether one or more work permits will expire on 31 December 2022. If this is indeed the case, apply for an extension immediately, provided this is desired.
For Swiss employees, like EU employees, you do not need a work permit.
68. Hire foreign employee still this year
If you acquire an employee from abroad this year, you can apply the 30% rule to his salary under certain conditions. According to this regulation, 30% of the employee’s gross salary is untaxed expense allowance. But then that employee must not have lived less than 150 kilometres from the Dutch border. The cabinet wants that from 1 January 2024, it will only be possible to apply the 30% rule up to the so-called Balkenende norm (€216,000 in 2022). However, this will be subject to a transitional arrangement with a three-year phase-in period. This probably makes it interesting to hire a foreign employee this year or in 2023 to make the most of the transitional right.
The employee must also have a specific expertise that is absent or scarce in the Dutch labour market. Whether someone has a specific expertise is assessed by the tax authorities based on their wages. For employees without a university master’s degree or employees with a university master’s degree and older than 30 years, a minimum wage of €39,467 will apply in 2022. For employees who do have a university master’s degree but are younger than 30, a minimum wage of €30,001 will apply. To the extent that your foreign employee’s wage is lower than €39,467 and €30,001 respectively, you can still contractually increase it. This way, you ensure that you can apply the 30% rule for the employee. This arrangement is valid for a maximum of five years after entry into service.
Have you not yet designated the wages of your recruited foreign employees? Then do so before 1 January 2023.
69. Determine the actual extraterritorial costs
Often, the application of the 30% rule for employees recruited from abroad will be advantageous. However, with the introduction of the maximum of the Balkenende norm as of 1 January 2024, it will be interesting to gain insight into the actual extraterritorial costs. This is because employers can then choose not to apply the 30% rule but instead reimburse the actual extraterritorial costs untaxed. In the relevant pay periods, however, the employee must meet the conditions.
In principle, the choice applies for a calendar year. So in the following year, the employer can possibly make a different choice.
70. Buy a new electric company car before 2022
If a company car is about to be replaced and you want to invest in a new electric car, do so this year. This is because on the additional taxable benefit for private use of a company electric car authorised for the first time in 2022, you may apply a 6% discount with a maximum of €2,100. In 2023, this maximum discount drops to €1,800. If you still buy an electric car this year where you are the first road user, you may apply the 2022 discount for 60 months after the first road admission.
71. New van sales in 2023
An exemption applies to vans that come into the name of an entrepreneur. However, the entrepreneur must use the van for more than 10% of his business. This must be a business for VAT purposes, other than the supply of a new means of transport in another Member State. If, within five years of the van’s registration, you no longer meet the conditions of the BPM exemption, you will in principle owe BPM as if you had registered the van at that time. So did you later register a van on 31 December 2017? Then you can save BPM by waiting to sell this van until after the turn of the year.
As of 1 January 2025, the BPM exemption for vans for entrepreneurs will expire.
72. Check use of company car in 2023
For making a company car available to an employee, you must in principle apply an addition to wages. This addition to wages reflects the benefit of the private use of the car. But under conditions, this addition can be omitted. For example, if the employee provides you with a copy of the ‘Statement no private car use’. In such a document, the employee declares to drive no more than 500 private kilometres with the company car. Before the turn of the year, ask your employee whether the situation will remain the same as of 1 January 2023. After all, if your employee drives more than 500 private kilometres with the car in 2023, you will have to start applying the addition for private use.
The addition applies per calendar year. Make your employee aware of this. That way, you will avoid exceeding the 500-kilometre limit just before the end of the year. For example, does your employee drive the company car privately only in the month of December and does it exceed 500 kilometres? Then you should still take into account the private use benefit for the whole year.
73. Monitor the limit of 500 private kilometres
Suppose you provide a company car to an employee. This employee does not use the car very often for private journeys. However, because he uses the company car to go on a winter sports trip during the Christmas holidays, he just exceeds the 500 private kilometres limit. This is a shame, as it means you have to apply the additional taxable benefit due to private use of the company car for the whole year. In principle, the addition in 2022 is 22% of the list value. If the CO2 emissions are zero, the addition rate up to a value of €35,000 (total value if it is a hydrogen car) is only 16%. So warn employees if they are just about to exceed the 500 private mileage limit in December.
The addition is 35% of the fair market value for cars that were first taken into use more than 15 years ago.
74. Keep track of car usage in the automotive industry
Are you active in the car industry? Then it is quite possible that (many of) your employees do not drive the same company car throughout the year. In that situation, keep good records of which employees drive which cars. Especially with the end of the year approaching, it is wise to check whether you have the registration of the cars and employees in order. Section 4 of the Handreiking privé gebruik auto (Guide to private car use) provides practical tips for the car sector.
75. Make employees pay their fines
Perhaps an employee commits traffic offences while using the company car. Sometimes the company then has to pay the fines in the first instance. If your company also faces this, recover these fines from the employee this year. Otherwise, the inspector may count the amount of the fines as part of the employee’s salary. Your company will then also risk an additional tax assessment for payroll taxes.
76. Cancel car lease contract employee before 2023
Do you assume that an employee who is currently still driving a leased company car will resign early next year? Then arrange that the compensation charged by the leasing company for the early termination of the lease contract is for the account of this employee. This works best if you terminate the lease before 1 January 2023 and pay the compensation to the leasing company yourself. You then claim the amount of the surrender penalty from your employee. This will allow your employee to deduct the continued payment of the penalty amount as an own contribution from his additional taxable income due to private use of the company lease car.
77. Purchase ordinary car in 2022
If you ever buy a car and pay BPM in the process, know that in 2023, the CO2 emission limits relating to the rate brackets will drop again. That means you will run into higher BPM rates sooner. Moreover, BPM rates will rise by 2.35% in 2023. This also applies to diesel vehicles. Therefore, buy a regular car still in 2022.
78. Increase travel allowance
Business car expenses are deductible for entrepreneurs and untaxed reimbursable to employees. In both cases, the tax authorities use the flat rate of €0.19 per business kilometre for this purpose. This amount has remained the same for a long time, but will increase to €0.21 as of 1 January 2023. If necessary, adjust declaration forms and/or employment contracts to this change.
The deduction of costs of sick visits and the deduction of donations consisting of waiving travel expenses by volunteers will also increase from €0.19 per kilometre to €0.21 per kilometre.
79. Apply for 2017 refunds soon
Were you still entitled to an income tax refund for 2017? But did you forget to apply for this refund? If so, you have until 1 January 2023 to still apply for the refund. The tax authorities will only refund you the tax amount if it exceeds the refund threshold. In 2017, this was €14, instead of the €15 applicable for 2022.
80. Do averaging while you still can
If you enjoyed varying box 1 income in three consecutive, still fairly recent years, you may be entitled to a refund due to averaging. To start with, you must then have paid more tax than if you had enjoyed steady income in those three years. Averaging involves a tax recalculation for three consecutive years based on the average income. If that tax is more than €545 lower than the tax paid, you will get the excess back. To get the averaging refund, you must submit a request to the Tax Administration. You can submit the request up to 36 months after the moment the last assessment of those three years has been irrevocably established. If you are still entitled to a refund for 2014 to 2016 and the 2016 assessment has a date of 20 November 2019, it has been irrevocably fixed since 1 January 2020. An assessment is irrevocable when the 6-week period for objection, appeal, appeal or cassation has expired. You then still have until 2022 to apply for that refund. Therefore, apply for the refund before 1 January 2023. Various tools are available on the internet to determine the intermediation refund.
The government wants to abolish the averaging scheme as of 1 January 2023. As a result, the last period over which one can average will consist of the years 2022, 2023 and 2024.
81. Request for provisional assessment IB
The inspector charges interest on a 2021 income tax assessment he imposes after 1 July 2022. This interest is currently 4% per annum. Compared to the interest the bank pays you, this interest is high. You can reduce tax interest by applying for a provisional income tax assessment 2021 as soon as possible. If you expect to have to make additional payments before 2021, it makes sense to request a provisional income tax assessment 2021 from the Tax Administration as soon as possible.
If you do not pay a 2021 tax assessment or pay it late, the Tax Authorities will also charge collection interest. This interest is in addition to the tax interest. By the way, from 23 March 2020 to 30 June 2022, the recovery interest was only 0.01% on an annual basis. That was a corona-related measure. From 1 July 2022 to 31 December 2022, the recovery interest rate will be 1% per annum. The next increase in recovery interest will be from 1 January 2023, to 2%.
82. Donate in 2022 for a home of your own
Do you have children aged between 18 and 40? Then they can increase the one-time exemption for gifts from you to €27,231. By the way, the day of the 40th birthday still falls within the age limit. If it concerns a gift to children for study, the one-off exemption is € 56,724. In the case of a gift for a private home, the one-off exemption even increases to € 106,671 (amount 2022). Incidentally, the € 106,671 exemption applies to anyone aged between 18 and 40 who uses the money for their own home. The government wants to abolish the increased exemption for gifts for owner-occupied housing. In 2023, the exemption will be reduced to the amount of the one-off increased exemption from parents to children between the ages of 18 and 40 (€28,947). In 2024, it will come to a complete abolition of the increased gift exemption for the purpose of own home.
Your child must choose which increased gift exemption he wants to use, that of €27,231, €56,724 or €106,671. If he chooses one exemption, he can no longer choose another increased exemption.
You do not have to donate the entire amount of € 106,671 in one year. You can donate the unused portion over a period of up to two years immediately following the first mentioned calendar year. Note that the application of the increased exemption is affected if a one-off increased donation has already been made in a previous year, if applicable. The option of spreading gifts will lapse for gifts made in or after 2023.
Also in the case of spread donation, the beneficiary may not exceed the age limit of 40 years. Has the person you want to gift to already reached the age of 40, but his partner is younger? Then the single exemption can still be applied.
83. Allow child to complete home maintenance in 2022
Did your child receive a gift from you in 2020 to use it to improve or maintain his own home? At that time, your child probably applied the increased gift exemption of €103,643 at that time to the gift. A condition for this exemption was that the donation was made under the resolutive condition that the donated amount must have been spent on the improvement or maintenance within two years after the calendar year of the donation. So point out to your child that the work must be completed before 2023, otherwise the exemption will expire!
84. Supplement increased exemption quickly
Was the single increased exemption for a child aged between 18 and 35 used before 2010, but not after that? Then in 2022, the increased exemption on gifts to children aged between 18 and 40 for the own home can be applied. In fact, this is an addition to the increased exemption previously enjoyed. Make use of the additional exemption of €29,493 in 2022 if the one-off increased exemption for a child between the ages of 18 and 35 was used before 2010 and not afterwards.
The beneficiary child or his/her partner must be between 18 and 40 years old at the time of the gift for the owner-occupied home.
85. File gift tax return before 1 March 2023
Did you receive one or more gifts in 2022 on which you have to pay gift tax? If so, you must file your gift tax return before 1 March 2023. This way, you will at least be on time. If you want to use the one-off (special) increased gift tax exemption so that you pay nothing on balance, you should also file your tax return on time. Because in this return, you must request the application of the one-off (special) increased exemption. If you file the gift tax return later than four months after the end of the calendar year of donation, the assessment period only starts the day after the return. In such a case, you will have to wait longer before you have certainty about the consequences of the donation.
You can find the gift tax return on the website of the Tax and Customs Administration. Or file your gift tax return online via ‘Mijn Belastingdienst’.
86. Pay off debt for paper donation
Have you made a gift to your children in the past, whereby you owed the amount to be gifted? Then see if you can pay off the debt as a result of this paper donation. This is because for the debt to be tax acceptable, you will have to owe interest of at least 6% on it. That is probably a lot higher than the flat rate of return for debts from 2023 onwards. In fact, for 2021, this rate is set at 2.46%. That means you will effectively deduct less interest than you pay.
87. Pay your alimony before 1 January 2023
An alimony payment to your ex-spouse is part of the personal deduction. In 2022, you can deduct alimony at up to 40%. In 2022, alimony will only be deductible at a maximum of 37%. So make sure the alimony payment falls in 2022. This means that you must have transferred the alimony amount by 31 December 2022 at the latest.
An alimony obligation is not a debt that reduces your Box 3 assets.
88. Buy off alimony obligation still in 2022
The fact that partner alimony is deductible at a maximum 37% in 2023 makes it fiscally attractive to buy off the alimony obligation still this year. This is because the redemption amount is also deductible.
89. Combine donations as much as possible
Donations to charities may be tax deductible. The charity must then be a so-called algemeen nut beogende instelling (ANBI). However, ordinary donations are not fully deductible. One of the conditions for the deduction of donations is that the donations have been paid. There is an amount that is not deductible, a threshold. In 2022, this threshold is €60 or 1% of combined (threshold) income, whichever is higher. If you pay all donations in one year, you will only have to deal with a non-deductible amount once. It may therefore be wise to pay donations in one go as much as possible.
Ordinary donations face a maximum deductible amount in addition to a threshold amount. A maximum of 10% of the combined threshold income is deductible as a donation. Consider this if you want to pay donations as much as possible in one year.
90. Donate to cultural institution in 2022
If you want to make a donation to charity this year, consider donating to a cultural public benefit organisation (cultural ANBI). This is more fiscally advantageous than a donation to an ordinary ANBI. A donation to a cultural institution gives you an income tax deduction of 125% of the amount donated, instead of 100%. But the additional 25% deduction is capped at €1,250. Furthermore, as with ordinary donations, a threshold of 1% of the aggregate income before application of the personal deduction applies, but at least € 60. The maximum deduction is 10% of the aggregate income before application of the personal deduction. Another important point is that in 2023, the maximum effective percentage at which you can deduct donations will drop from 40% to 37%!
If you have your own PLC, you can also donate to a cultural institution through your PLC. This provides an additional deduction in corporate tax of 50% of the amount your PLC has donated to cultural institutions. This additional deduction amounts to a maximum of €2,500.
91. Convert your ordinary donations into periodic donations
Your annual donations to an ANBI are only deductible if they exceed a threshold. For 2022, that threshold is at least € 60 or 1% of your aggregate income, whichever is higher. If you have a fiscal partner, then 1% of the joint aggregate income applies. The deduction of donations is also capped at 10% of the (joint) aggregate income. Are your donations to charities not fully deductible? Then consider converting donations into periodic gifts. Here, you put down in writing that you will donate a certain amount for five years, unless you die earlier. You no longer need to go to the notary for periodic donations. Periodic donations are fully deductible. If you convert your donation into a periodic gift this year, you will benefit from full deduction this year.
The Supreme Court has ruled that should the five-year condition have been met, this implies a substantial element of risk. Even a mortality rate lower than 1% would constitute a periodic gift. Nor does the fact that the periodic gift depends on more lives prevent deduction as a periodic gift.
92. Check whether your periodic gifts are still optimal
Did you enter into an obligation to make periodic donations after 4 October 2022, 16:00 or do you still want to enter into such an obligation? If so, you may deduct a maximum of €250,000 per calendar year from 2023. If you have or are deemed to have had a tax partner all year, you and your partner must add up all periodic donations. The maximum of €250,000 applies to both of you, so not to every tax partner. Therefore, check that you do not donate so much that part is no longer deductible.
93. Aggregate healthcare costs as much as possible
Some healthcare costs, such as costs of a dentist, physiotherapist or specialist, are tax deductible. But costs covered by the compulsory deductible excess are not deductible. Anyway, healthcare costs are deductible only insofar as they exceed the threshold. Are you buying a hearing aid this year and expecting a high dental bill in 2023? You will then face a threshold both this year and next year. If possible, it is wise to have both the hearing aid and the dental treatment in the same year. You will then only have to deal with a threshold once. That way, more healthcare costs are deductible for you.
94. Still conclude cohabitation contract in 2022
Tax partnership can offer certain advantages, for example if one of the partners does not fully use their tax-free assets in Box 3. If you and your partner are not yet each other’s tax partners, you can still arrange to be considered each other’s tax partners for income tax purposes for the whole of 2022. At the very least, you must then live together unmarried and be registered at the same residential address as of 1 January 2022. In addition, a certain situation must be in play. The situation you can most easily achieve in the short term is to conclude a notarised cohabitation contract. Arrange this before 1 January 2023 and meet the aforementioned conditions. Then you can still qualify as tax partners for the whole of 2022.
There are five other situations in which one can obtain tax partnership for income tax purposes for the whole year. Namely, if a child has been born from your relationship, either of you has recognised a child of the other, either of you is considered a partner of the other in a pension scheme, you and your partner own your own home together or a minor child of either of you is registered at your residential address. In the latter case, you and your partner must both be of age.
Tax partnership also leads to the aggregation of debt thresholds of €3,200 per tax partner. If your own debts exceed your debt threshold, while your potential tax partner has no debts, you will face his debt threshold due to the tax partnership. With tax partnership, you also have to aggregate your and your partner’s aggregate income to calculate various deduction thresholds, including that of healthcare expenses. So calculate whether the advantages of tax partnership outweigh the disadvantages.
95. Perform periodic settlement 2022
Sometimes spouses married on prenuptial agreements forget to actually implement a periodic settlement clause in those agreements. In the absence of such settlement, at the end of the marriage due to divorce or death, a settlement takes place (also for tax purposes) as if there was a community of property. Are you also married on prenuptial agreements with a settlement clause? If so, do not forget to prepare this settlement for 2022 as well.
You can ‘repair’ a periodic settlement clause that has not been implemented for years by still calculating the amounts to be settled. Then record the outcome in a settlement agreement. Afterwards, you do have to implement the clause annually or have the prenuptial agreement amended on this point.
96. Still pay annuity premiums in 2022
If you are facing a pension gap, it might be interesting to take out an annuity. This is because annuity premiums are tax deductible within certain limits. In principle, the deduction of annuity premiums is limited to the so-called annual margin. In addition, the premium is only deductible if you actually paid it in the year in which you want to deduct the premium. Therefore, make sure you have paid the annuity premium no later than 31 December 2022.
Have you paid annuity premiums in the past five years without reporting them in your income tax return? And is the relevant assessment already irrevocably fixed? Then you can apply for an ex officio reduction with the inspector. You must then be able to prove that you did not deduct the paid premium. For example, by submitting copies of your returns and the assessments for the relevant years. To be eligible for a refund for 2017, you must apply for an ex officio reduction before 1 January 2023.
97. Pay off small debts before 2023
Leaving small debts outstanding is fiscally disadvantageous as they only reduce the tax base of Box 3 to the extent that they exceed a threshold of €3,200 (amount 2022) per tax partner. This applies even under the legal restoration offered, as one must still determine the size of debts in asset category 3 using the statutory rules including debt threshold. It is more fiscally advantageous to pay off small debts. This way, they are no longer present on the reference date of 1 January 2023, while the box 3 levy is immediately reduced. Therefore, redeem small debts before 1 January 2023 as much as possible.
98. Still make major expenses in 2022
Are your assets so high that you have to pay box 3 tax even under the flat-rate savings variant? And do you own enough savings to make any expenses still in 2022? Then it might be fiscally advantageous to make large private purchases that you had actually planned to make in 2023, such as buying a new car or new furniture, before the turn of the year. This is because such possessions are not part of the basis for the box 3 levy, while the savings you use for the purchase will then no longer count towards the basis on the reference date of 1 January 2023. So you can save quite a bit of tax in Box 3!
Money held in bank deposits falls into asset category 1. The flat rate of return of this asset category for 2022 has not yet been determined, but for 2021 this return was only 0.01%.
99. Find business reason to sell investment in 2022
Without further measures, it is easy to reduce the box 3 tax under the Box 3 Bridging Act by selling investments just before the reference date. One then temporarily deposits the proceeds into a bank account. Therefore, such a sale and deposit will be ignored if it takes place in a continuous three-month period starting before and ending after the reference date. However, this measure does not apply if you plausibly prove that you acted for business, i.e. non-tax reasons.
100. Pay tax assessments before 2023
Tax debts do not count when calculating debts for Box 3. Therefore, it is advisable to pay a received tax assessment before 1 January 2023. You will then not have to pay box 3 tax on the funds you use to pay this assessment.
The rule that an outstanding tax debt does not qualify as a debt in box 3 has some exceptions. For example, you are allowed to report the unpaid inheritance tax as a debt in box 3.
101. Wait with selling green investment
Do you want to make the most of the exemptions in box 3? Then also take advantage of the exemption for green investments. This is because these investments are exempt up to a maximum of € 61,215 (amount 2022) per person (€ 122,430 for tax partners). With the additional tax credit of 0.7%, this results in nice tax savings in Box 3. Do you also want to use this tax benefit in 2023? Then it is important that you own the green funds on 1 January 2023 (reference date). So if you are considering disposing of these funds, hold them at least until after 1 January 2023.
If you do not yet have any green investments but are considering investing your money green, do so before 1 January 2023 if possible. After all, in that case, you can already benefit from the exemption and the tax credit in 2023.
102. File your request for a provisional assessment before 1 November 2022
You can reduce your box 3 assets as of 1 January 2023 by filing a request for a provisional assessment before 1 November 2023. If the Tax Administration imposes a tax assessment on you before 1 January 2023 that you pay immediately, you have already reduced your box 3 assets. But even in the event that the Tax Authorities only issue the assessment after 31 December 2022, you can reduce your taxed box 3 assets. This is because in this situation, you may deduct the tax amount paid after 31 December 2022 from the box 3 capital as of 1 January 2023. Incidentally, the same applies if you filed a final tax return before 1 October.
103. Still take a plane trip in 2022
Do you still want to take a plane trip abroad, to stay there for a short time? Then know that the air tax will increase by €17.95 as of 1 January 2023. Because the current air tax rate of €7.947 is indexed annually, the new rate including indexation and increase will be €26.43 per departing passenger. Flying short distances is thus discouraged, as the air passenger tax weighs relatively more heavily on this. Therefore, consider making the air travel as late as 2022.
104. Find new protected tenant
For both income tax on savings and investment income and inheritance and gift tax, one has to determine the value of rented property. The value of rented properties with rent protection is determined by multiplying the WOZ value by the vacant value ratio. From 2023, a ratio of 100% will apply to temporary leases and to lettings to related parties. This effectively abolishes the vacant value ratio in those situations. So if you are renting to a related party, consider renting permanently to a third party.
105. Delay sale of mortgage-free home until 2023
Are you planning to sell your debt-free home soon without immediately buying a new home? It might be better to wait with that until 2023. After all, if you sell before 1 January 2023, the received sales sum counts in the basis of the capital gains tax for the year 2023 (reference date 1 January 2023). For example, if you sell the property on 5 January 2023, the purchase price will not fall into Box 3 in 2023.
The increase in transfer tax from 1 January 2023 may make it more difficult to sell your own home in 2023 at the desired selling price. At least, if the buyer wants to rent out the property, as the rate does not change for owner-occupied properties.
106. Selling home under mortgage in 2022
Are you considering selling your own home that is still under mortgage? And do you want to wait until after the turn of the year to do so in order to save box 3 tax? If so, those box 3 tax savings might be disappointing. After all, after the sale, only the difference between the selling price and the sum of the selling costs and the mortgage to be paid off falls into Box 3. Against this (limited) benefit, the transfer tax for real estate other than owner-occupied houses will rise to 10.4% from 1 January 2023. This makes it more expensive for a buyer to take over your own home, unless it also becomes an owner-occupied property for him. This could be another reason to sell your own home in 2022 anyway.
107. Pay mortgage interest 2023 in advance
Will you reach state pension age in 2023 or fall under a lower tax rate in 2023 for some other reason? If so, still pay the mortgage interest in 2022 that relates to the period up to 1 July 2023. You will then deduct this interest at a higher rate, so you will pay less tax. In addition, the top rate at which you can deduct mortgage interest falls from 40% to 37% in 2023.
Prepaying for a longer period is pointless. If you do, the inspector will disallow the prepaid interest as a deduction for 2022.
108. Repay mortgage in 2022
In certain cases, it is (fiscally) advantageous to repay some or all of your home equity debt. For example, suppose you still have a partially repayable mortgage with a fairly high interest rate. At the same time, you have taxed assets in Box 3 that you do not need liquidity. If the return on those assets is lower than what you pay net in mortgage interest, repayment is probably advantageous. Ask your bank how much you can redeem penalty-free. This is often a maximum of 10% to 20% of the original mortgage amount per year. If you repay before 1 January 2023, you will also gain a box 3 advantage.
Extra attention is needed if you pay off your mortgage with bank balances. This is because the government will have to adjust the capital gains tax and it is expected that the fixed return on bank balances will be on the low side (0.04% for 2020). In that case, early repayment may well not be fiscally advantageous.
If you have no owner-occupied property debt in 2022 or an owner-occupied property debt that is less than the owner-occupied property rate, you will get a deduction. That deduction was initially the owner-occupied home lump sum or the positive difference between the owner-occupied home lump sum and deductible owner-occupied home expenses. On balance, the income from your own home was then zero. Since 2019, this deduction will be limited. In 2022, 13.33% of the difference between the owner-occupied home lump sum and the deductible costs of owner-occupied home is now taxed. In the coming years, an additional 3.33% of the balance will be added as income each time. As a result, in 2023, 16.66% of the positive difference between the owner-occupied home lump sum and deductible expenses will be taxed as income from work and home.
109. Take on remodelling debt in 2022
Do you plan to have your own home remodelled? If so, enter into the necessary obligations before 1 January 2023. This will reduce your basis for taxation in Box 3.
Remodelling a home may result in the home having a higher value. In this context, it is nice if your converted home retains the character of an owner-occupied home and does not fall into box 3. Incidentally, this is in principle even possible if you rent out part of your own home. But in that case, you will pay box 1 tax on 70% of the rent received in addition to the tax on the owner-occupied home forfait (including the let part). By the way, the mortgage interest paid for the property remains fully deductible in principle.
110. File transfer tax ‘unforeseen circumstances’ declaration
If a natural person acquires a property that will serve as his main residence, he only has to pay 2% (or sometimes even none) transfer tax. When assessing this main residence criterion, unforeseen circumstances that arise after the acquisition, for example a death or gift, may now be taken into account. Unforeseen circumstances that arise after the purchase agreement has been concluded, but before delivery, may also be relevant. Therefore, submit a completed transfer tax ‘contingencies’ declaration to the notary.
It is very important that the transferee intended to use the property as his or her main residence before the unforeseen circumstances occurred, but is no longer able to do so due to these circumstances.
Source: © Sdu B.V. 2022
The utmost care has been taken in editing this document. Nevertheless, neither the editors nor the publisher can accept any liability for any inaccuracies or imperfections.