With the end of the year 2021 in sight, it is a good time to check whether you still need to take action on the tax front. Some matters cannot wait until 2022, while others require postponement until the new year. There are various changes that require your attention. You can read about them in these year-end tips 2021.
1. PRESS ANNUAL PROFIT WITH PROVISION
Although various companies expect to make a low profit or even incur a loss in 2021, you may be one of the entrepreneurs who make a substantial tax profit. If you would like to reduce your taxable profit for 2021, consider making a provision for (large) expenses that you expect to incur in 2022 or later. A point for attention here is that these future expenses must have their origin in facts and circumstances that occurred in 2021 or earlier. Furthermore, you must be able to attribute these facts and circumstances to that year and it must be reasonably certain that you will incur the expenditure. Discuss with your advisor whether you can still form a provision in 2021.
2. ARRANGE KIA FOR 2021
Do you still want to invest in company assets in 2021? Please note that the small-scale investment deduction (KIA) will lapse if the investments that entitle you to KIA this year amount to more than € 328,721. If there is a risk of exceeding this amount, it is better to postpone the investment until 2022. The investment is allocated to the year in which you enter into obligations. When entering into obligations, you can think of placing an order, agreeing to a quotation or signing a purchase contract. If you produce an asset yourself, then it is the year in which you incur the production costs that counts.
Is your company part of a general partnership or another partnership? In that case, look at the total investment of the partnership and not at the investment of each partner separately to determine the KIA.
3. SAVE KIA WITH DOWN PAYMENT
If you enter into investment commitments for a business asset before 1 January 2022, you may apply the small-scale investment deduction (KIA) in 2021. In principle, the condition is that you paid for the business asset and put it into use in 2021. But what if you have not yet used the asset in 2021? And the investment deduction initially exceeds the amount that you paid for that investment at the end of 2021? Then your KIA is limited to the amount you paid in 2021. Het meerdere is aftrekbaar als KIA in 2022. Wilt u de KIA toch volledig benutten in 2021? Then make a down payment, so that the total payment in 2021 for the investments is at least equal to the amount of the KIA for that year.
4. SELLING ‘NEW’ BUSINESS ASSETS IN 2022
Are you considering selling business assets that you purchased in 2017? And have you received investment deduction over the investment in these assets at that time? Check whether you can postpone the sale until after the turn of the year. Otherwise you will run up against the disinvestment addition. This means that you will have to repay part of the investment deduction. The disinvestment addition amounts to a maximum of the investment deduction received at the time and may be omitted if you sell the business assets for a maximum of € 2,400.
The disinvestment addition is also relevant for other forms of disposal. Suppose that you transfer a business asset to your private assets. This constitutes a fictitious disposal. In such situations, the tax authorities take the fair value of the asset as transfer price.
5. DEFER ENVIRONMENTAL INVESTMENT UNTIL 2022
If you are planning to invest in an asset that qualifies or will qualify as an environmental asset in 2022, postpone the investment until after 31 December 2021. For 2022, an increase of the environmental investment deduction (MIA) will take place. For this year, the MIA amounts to 36%, 27% and 13.5% for category I, category II and category III respectively. In 2022, these percentages will increase to 45%, 36% and 27%. Category I will also be expanded to include certain green investments.
Once the budget for the MIA has been reached, it will no longer be allocated. The budget for the period 2022-2024 will be increased by € 30 million per year. The budget for 2022 is therefore expected to amount to € 144 million.
6. REPORT SPECIAL INVESTMENT QUICKLY
Have you recently made an investment in a business asset on the Energy List 2021 or the Environmental List 2021? If so, report this to RVO.nl within three months of entering into the investment commitment. Otherwise, you may not apply the energy investment allowance (EIA) or the environmental investment allowance (MIA).
You may not apply both the EIA and the MIA for the same investment.
7. APPLY FOR WBSO 2022 ON TIME
You can reduce the (wage) costs of your research and development project in 2022 if you claim a so-called allowance under the WBSO. Do you employ personnel? Then apply for this concession at the latest on 20 December 2021! Are you a self-employed person without personnel? Then you have until 1 January 2022 to submit the application for a WBSO allowance for the year 2022.
Income Tax entrepreneur
8. TRY TO MAKE SOME MORE HOURS
As an entrepreneur, you may be entitled to various entrepreneurial facilities in the income tax. Think for example of the entrepreneur’s deduction and the possibility to add to the old age reserve. To be eligible for these facilities, you must meet the so-called hour criterion. This means that in 2021, you must spend at least 1,225 hours on your business. This can be made plausible with an hourly administration. Incidentally, in connection with the corona crisis, entrepreneurs may assume for the period from 1 January 2021 to 1 July 2021 that they have devoted at least 24 hours per week to their business. Even if that was not actually the case. Do you doubt whether you have worked enough hours for your business? Then make some extra hours, so that you will reach the 1,225 hours.
In case of pregnancy, the hours that the entrepreneur would normally have worked in the 16 weeks around the birth still count.
9. ADD TO RETIREMENT RESERVE QUICKLY
If you are an entrepreneur with personal income tax entitlement, you can, under certain conditions, defer taxable profit by making an addition to the old-age pension reserve. You do this in principle for 9.44% of the profit, but at most for € 9,395 (figures 2021) or the amount by which the business assets at the end of the year exceed the old-age reserve at the beginning of the year.
To add to the old-age reserve, you must meet the hour criterion in 2021. In addition, you may not have reached retirement age at the beginning of 2021.
Also look at the rate at which the addition is deductible. If you later have to pay off the old-age reserve at a higher rate than the rate at which the addition is deductible, it is better not to include the addition.
10. START A SIDE JOB AFTER THE TURN OF THE YEAR
To meet the hour criterion, which gives access to various tax facilities, you must also spend more than 50% of your total working hours on your business. Therefore, it may be better not to spend too much time now on other activities (e.g. ‘side jobs’ in employment) that yield less than the tax facilities.
The 50% requirement will not be taken into account if you have not been an entrepreneur in one or more of the previous five calendar years and have applied the self-employed deduction no more than twice during that period.
11. WAIT UNTIL 2022 WITH GRANTING PARTNER ALLOWANCE
Has your partner performed at least 525 hours of work for your company this year without receiving compensation? And do you want to start granting him or her a work allowance? Please wait until after 2021. You can then still use the collaboration deduction this year. The deduction is 1.25% of the profit if your partner has worked at least 525 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 enterprise. Incidentally, certain types of profit, such as cessation profit, do not count towards the calculation of the collaborative deduction.
The advantage of granting an employment allowance is that it is deductible. But an employment allowance of less than € 5,000 to your partner is neither deductible nor taxable. So calculate what is most advantageous. In doing so, pay attention to the effects that a higher or lower income can have on tax credits and allowances.
12. SETTLE 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 with persons belonging to your household. You can request the tax authorities to waive this restriction via your tax return. An important condition is that the obligations are real. In addition, in principle you should not have made the investment to influence the percentage of the investment deduction. The inspector will apply the disinvestment addition if you do not fulfil the obligation towards the relative. The same applies if the obligation changes within five years after the start of the calendar (book) year in which you entered into the obligation. If you entered into such an obligation in 2017, you must therefore pay the interest and repayment due before 1 January 2022. If not, make it plausible that the deviation from what has been agreed is based on business grounds.
13. SET OFF IB LOSS FROM 2012
Have you suffered a tax loss in 2012 with your IB company that you have not yet fully set off? If so, do not defer taxable profit too much this year. For example, you can refrain from making an addition to the retirement reserve. Or you can try to release a fiscal book profit on a business asset. Insofar as you do not set off the loss from 2012 against profits from 2021, this loss will no longer be set off as of 1 January 2022.
Companies and Directors and Major shareholders
14. LIMIT TAX INTEREST WITH VA VPB
The Tax and Customs Administration charges interest on a corporate income tax assessment for 2020 that is imposed after 1 July 2021. This interest has been 4% per annum since 1 October 2020. Compared to the interest the bank pays you, this interest is high. You can limit tax interest by requesting a provisional corporate income tax assessment for 2020 as soon as possible. Do you expect your PLC to have to pay additional corporation tax for 2020? If so, request a provisional assessment from the Tax Administration as soon as possible.
If you do not pay a 2020 tax assessment on time, the Tax and Customs Administration will also charge collection interest. This interest is in addition to the tax interest. You should therefore submit a request for a provisional assessment as soon as possible, but if necessary also ask for a payment arrangement. Incidentally, the collection interest up to and including 31 December 2021 is only 0.01% per year, due to the consequences of the coronavirus. After that, the collection interest will rise again.
15. GIVE PORTFOLIO HOLDER DIVIDEND IN 2021
Due to European case law, the State Secretary of Finance will partially approve the refund of dividend and gambling tax to foreign portfolio shareholders as from 2021. This concerns shareholders who are in the same position as Dutch entities with regard to their place of residence. But the State Secretary also intends to limit the set-off of withholding taxes to the corporate income tax owed in a year. However, the non-deducted withholding taxes can be carried forward to a later year. Would you like to help your foreign shareholders offset their withholding taxes as soon as possible? Then grant them a dividend this year.
16. IN CLAIM ON BV AFTER 1 JANUARY 2022
If you want to collect a claim on your PLC, wait until after 1 January 2022. This will prevent the amount of money you receive from immediately falling into the yield basis of box 3 for the year 2022.
The case is more complicated if you have provided a loan of up to three months from your private assets. The Tax Authorities apply the following sanctions in such a case. Firstly, the Inspector attributes the claim to your box 3 capital. At the same time, the benefit from the making available is taxed in box 1. These penalties may also apply if the posting lasted longer 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 your actions are based for more than 50% on business considerations.
17. STOP EVAPORATION OF LOSS OF BV FROM 2012
Entities subject to corporate income tax may offset losses against profits. A loss can be set off backwards against the profit of the previous year. The intention is that losses that have arisen as of January 1, 2022, or on December 31, 2021, can be carried forward indefinitely. But a loss from 2012 can be set off for the last time this year. Is a tax loss from 2012 in danger of evaporating because of a too low taxable profit in 2021? Then prevent loss evaporation by releasing a provision or tax reserve. Or sell assets with hidden reserves to an affiliated company. A sale/leaseback may be possible instead of an ordinary sale.
As from 2022, the loss relief per year is limited to € 1 million plus 50% of the profit to the extent that it exceeds € 1 million.
18. DEFER PRIVATE LIMITED COMPANY PROFITS UNTIL 2022
Is the taxable profit of your private limited company in 2021 more than € 245,000? Then the excess is taxed at 25% corporate income tax. If so, postpone part of the profit until 2022. In 2022, the lower corporate tax rate of 15% will be extended from € 245,000 to € 395,000. This way, you can achieve a tax benefit of 10% for the deferred profit.
19. USE AB TAX CREDIT BEFORE 2022
Do you no longer have a substantial interest (AIF) in 2020 and 2021, but still have an outstanding AIF loss? Then convert this loss into a tax credit in 2021. The tax credit amounts to 26.9% of the outstanding ab loss. If you convert your ab loss into a tax credit in 2021, you may deduct this tax credit from the income tax on box 1 income from 2021 to 2028 inclusive. Please note the year in which you suffered the relevant ab loss. The tax credit is no longer applicable if the ab loss is older than nine years.
20. STOP MORTGAGE BEFORE 2022 IN BOX 3
Have you taken out a loan for your own home with your PLC in or after 2013? And do you pay a low interest rate on it? If so, calculate whether it is fiscally more advantageous to have the debt fall into Box 3. Of course, you will lose the interest deduction in Box 1, but on the other hand, you will have fewer assets in Box 3. If the difference between the fixed percentage in Box 3 (maximum 5.69% in 2021) and the mortgage interest rate is large enough, the mortgage debt in Box 3 may be quite beneficial. Since a mortgage debt entered into in or after 2013 only qualifies as an owner-occupied home debt under strict conditions, this does not have to be difficult. You must ensure that you no longer meet any of the conditions. You can, for example, agree with your PLC that the loan will be repayment-free. Arrange this in 2021, then you will already benefit from it in 2022.
Do you have a loan from before 2013 or a loan to which the pre-2013 regime applies? Then it is not possible to convert an owner-occupied home loan into a box 3 debt. With such loans, you can agree not to have to make repayments during the term. In that case, such a mortgage will not fall into box 3.
21. CONSIDER REFINANCING A BV LOAN
In 2023, the Excessive Loans to Ownership Act will enter into force. If you owe more than € 500,000 to your private limited company, the excess is a fictitious profit distribution. You must pay tax on this profit distribution. Have you privately financed real estate with a loan from the company? And do you have more than € 500,000 in debt to the company? Then consider refinancing the debt for the real estate with a loan from the bank. If you take out the financing this year, you can still benefit from the current low interest rate.
An alternative to refinancing the property is to sell it to your company. Bear in mind that this costs 8% transfer tax.
22. FILE ANNUAL ACCOUNTS ON TIME
Make sure that your PLC files its annual accounts on time. This is especially important if bankruptcy is imminent. In this situation you risk being held jointly and severally liable for the debts of the PLC that cannot be paid through liquidation. The deposit of the annual accounts with the Chamber of Commerce (KvK) must take place within eight days after adoption of the annual accounts. Furthermore, the deposit must take place no later than twelve months after the end of the relevant financial year. The latest filing date for the financial year 1 January 2020 to 31 December 2020 is therefore 31 December 2021. Are you afraid that you will not be able to file the annual accounts in time? If necessary, you can file the provisional annual accounts.
If all shareholders are also directors or supervisory directors, you have less time to file the annual accounts. Even if the maximum five months’ postponement is granted for drawing up the annual accounts (the normal term is five months), you must file the annual accounts for the financial year 1 January 2020 to 31 December 2020 by 8 November 2021 at the latest. Incidentally, the articles of association may deviate from this statutory regulation!
Is it really impossible to file the annual accounts in time? Then you still have a possibility to avoid being held liable. Although you are deemed to have improperly fulfilled your duties as a director, you will not be liable if you can make it plausible that your improper management was not a major cause of the bankruptcy.
23. STOP TAX DEBTS IN BV
Claims from loans granted to third parties are assets that are taxable for you in Box 3. But (large) tax debts are not deductible in Box 3. Suppose you have your private limited company take over the receivables and the tax debts. In that situation, a set-off of the claims and debts will take place. Insofar as the debts exceed the claims, you will have a debt to your PLC. However, this debt qualifies as a debt for box 3. This allows you to save box 3 tax. Of course, the transfer of the receivables and tax debts must take place before the reference date of 1 January 2022. Do you have assets and debts in Box 3? Then consider having your private limited company take over these assets and debts.
If on balance a claim arises on your PLC, this claim falls under the disposal scheme. The consequence is that you have to pay tax on the interest in box 1. Calculate whether this is desirable. If it is undesirable, then only transfer a part of your receivables!
24. COMPLETE LIQUIDATION IN 2021
In principle, a holding company can deduct the loss from the liquidation of a company in which it has a participation. However, this deduction is limited to € 5 million. The deduction limitation will not apply if at the moment immediately prior to the completion of the liquidation of the dissolved company’s assets, 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 established in the Netherlands, another EU or EEA Member State or in a designated state. In principle, the holding company must meet the aforementioned conditions without interruption in the five-year period immediately preceding the completion of the liquidation.
25. BEWARE OF HOLDING COMPANY LOSSES
Recent case law has shown that so-called holding company and group financing losses can be set off against profits not resulting from holding company and group financing activities. This loophole will be closed with retroactive effect until 1 January 2021. Are the profits of a subsidiary company that is incorporated regarded as the profits of a (holding) company? And does that (holding) company have losses to which the holding loss scheme still applies? In that case, the activities and assets of that subsidiary are also regarded as the activities and assets of the (holding) company that set up the subsidiary for the purposes of the scheme. This attribution is also made in proportion to the capital contribution.
26. BUSINESS SUCCESSOR MUST BE EMPLOYED NOW
In principle, a fiscal settlement takes place if you as a DMS gift the shares in your PLC to your children or another business successor. The fair value of the shares minus your acquisition price is then taxed. Under certain conditions, this tax claim can be passed on. One of the conditions is that the acquirer has been employed by the company for at least 36 months prior to the gift. This condition requires the necessary preparation. Are you considering donating the shares in your PLC to your children or business successor on 1 January 2025? If so, employ them in your company no later than 31 December 2021.
27. WITHDRAW FROM VBI ONLY AFTER 2021
Do you hold a substantial interest in an exempted investment institution (VBI)? Then the tax authorities will in principle calculate a notional regular benefit of 5.69% (2021 percentage) of the fair value that was attributable to the shares at the beginning of the year. You may reduce this fixed regular benefit by the amount that you have actually received in dividends. However, this may not result in the fixed regular benefit becoming negative. Do you think the fixed return is too high? Then alienate your shares in the VBI to invest in box 3 after January 1, 2022. If you dispose of your interest in the VBI after the reference date for box 3 in 2022, the proceeds for 2021 will not yet be included in the return basis. However, the fixed advantage of the VBI must be calculated on a time-proportional basis. But the amount of the lump-sum benefit is not so high, since it only concerns a short period.
Are you transferring your assets from box 3 to the VBI again within eighteen months? Then a sanction comes into effect. The inspector will then tax the (fixed) income from the assets in question in both box 2 and box 3. If you are thinking about transferring assets from your VBI to box 3, please check whether you meet the eighteen-month deadline.
You have the possibility to provide proof to the contrary. The sanction does not apply if you make it plausible that you will transfer the assets back to box 3 within eighteen months for commercial reasons.
28. REQUEST FOR DISASSOCIATION BEFORE 2022
In 2022, the lower corporate income tax rate bracket of € 245,000 will be extended to € 395,000. Because the low rate bracket applies per company, it may be interesting to break up an existing fiscal unity (FE) for corporate income tax purposes. Do you want this so-called disentanglement to take place on January 1, 2022? In that case, you must have submitted the request for disentanglement no later than 31 December 2021.
Check whether the break-up of the fiscal unity will not result in a fiscal settlement. This is the case if six years prior to the termination, an asset was transferred within the fiscal unity and a profit would have been realised on the transfer to a third party.
29. DISCLOSE UNDECLARED TBS FROM 2018
Have you made one or more assets available to your private limited company (BV), but not added the compensation for this to your box 1 income? Report this as yet using the disclosure scheme. If you submit the request for application of the voluntary disclosure scheme within two years of the tax return in which you concealed the income, you will not incur any fine. If you repent later, the inspector will reduce the fine to 60% of the maximum fine that he can impose if you do not repent at all. Avoiding the fine is not possible if you have concealed income from substantial interest or from savings and investments!
The exclusion of the disclosure scheme regarding undeclared income from Box 2 and Box 3 applies to tax returns that you should have filed before 1 January 2019. Rebinding for tax returns that have been or should have been filed remains possible, always within the two-year period.
30. CHECK TRANSFER PRICES
The tax authorities are going to amend the rules for the arm’s length nature of transfer prices between international group companies. This amendment means that the inspector will not allow a reduction of the taxable profit without this being offset by an increase in the tax base abroad. This deduction limitation violates the concept of total profit, but the Deputy Minister is of the opinion that this measure is justifiable as it prevents tax mismatches. Therefore, please check whether the transfer prices you apply with foreign group companies cause problems under this new regulation.
31. ASK FOR A DOLLAR DECLARATION DECISION
Do you wish to file your corporate income tax return in dollars or another currency than the euro as from 2022? If so, request a functional currency ruling from the tax authorities before 1 January 2022. If the tax inspector issues such a decree, you are in principle bound by this choice for a period of ten years.
32. RESTRUCTURE HYBRID ENTITY
Do you use foreign partnerships that are transparent for tax purposes in the country of residence, but are subject to independent tax liability under the tax legislation of the participant’s state? Then you are working with a so-called reverse hybrid entity. From the financial years starting on or after 1 January 2022, these entities will be subject to full domestic tax liability in the Netherlands. At least, if they are established in the Netherlands or if the partnership is entered into here. If the profit is taxed directly on a participant in a state that considers that entity transparent, the law will provide for a deduction possibility. Do you find this development undesirable? Restructure your company so that the foreign entities are no longer (fully) taxed in the Netherlands.
As of 1 January 2021, a hybrid entity is not liable for withholding tax if you can demonstrate that none of the underlying beneficial owners – possibly through a cooperating group – has a qualifying interest in the hybrid entity.
VAT AND TRANSFER TAX
33. CORRECT VAT CAR IN 4TH QUARTER 2021
The VAT charged to you (the company) in 2021 on the purchase, maintenance and use of the company car is deductible as input tax. At least, as long as you(w company) used the car for taxable turnover. Did you also use the car for private purposes in 2021? If so, apply an adjustment for this in your last VAT return of 2021. If you have not kept a record of the actual private use, you may assume 2.7% of the list price (including VAT and BPM). For certain cars, including cars that have been used for five years in the company, you may use a flat rate of 1.5% of the list price (including VAT and BPM).
Commuting counts as private use for VAT purposes.
34. SUBMIT CORRECTION NOTICE FOR VAT BEFORE 2022
As of 1 July 2021, VAT entrepreneurs can no longer apply the mini One-Stop-Shop scheme (MOSS). It is possible, however, that entrepreneurs have applied the MOSS over the periods of 2020 due to transactions with a party from the United Kingdom (UK). Is a correction of VAT declarations for periods up to and including the 4th quarter of 2020 necessary? If so, submit the relevant correction notices no later than 31 December 2021.
35. QUICKLY CLAIM BACK OVERPAID VAT
It is wise to regularly check your records to ensure that your VAT returns are correct. Do you notice during the inspection of your VAT returns that you have paid too much VAT? If so, correct the amount of overpaid VAT via a supplementary declaration. You can do this for both 2021 and the five previous years.
You do not need to use a supplementary declaration if the correction is no more than € 1,000. In this situation, you can include the correction in your next VAT return. The same applies to a correction of no more than € 1,000 in underpaid VAT.
36. INCLUDE BUA CORRECTION IN FINAL 2021 TAX RETURN
You may have deducted VAT on costs for business gifts or personnel allowances in 2021. If so, check whether you benefited one or more members of staff by more than € 227 (excluding VAT). And check whether you have benefited one or more business contacts to the tune of more than € 227. If at least one of the two situations occurs, you must correct and pay the deducted VAT in the VAT return for the last period of 2021. This is also referred to as the BUA correction (BUA: Decree on the exclusion of the deduction of VAT).
The BUA ruling does not apply to the company bicycle. In addition, separate rules apply for the deduction of VAT on costs of food and beverages provided to staff.
37. ISSUE 90% DECLARATION BEFORE 28 JANUARY 2022
Did you buy a property in 2020 and did you and the seller opt to tax the supply with VAT? If so, issue the 90% declaration to the vendor and the tax authorities within four weeks after the end of the financial year following the financial year of supply (i.e. before 28 January 2022). State in this statement whether you are using 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 subsequent financial year? Then the inspector will state that the supply is still exempt from VAT with retroactive effect. For the seller, this means that the right to deduct VAT lapses. In that case, he must repay the VAT he has deducted in advance to the tax authorities. If, in a subsequent year, you no longer meet the 90% criterion, you will have to review your VAT deduction in the usual manner.
38. MAKE ARRANGEMENTS FOR VAT LOSS ON THE SUPPLY OF PROPERTY
Are you selling a property yourself? And does your customer want you to opt for a VAT-taxed supply? If so, include in the purchase agreement clear arrangements about the possible VAT loss in the event that the option for VAT-exempt supply lapses. For example, you can stipulate that the purchaser will reimburse you for the VAT loss if he no longer meets the 90% standard.
39. START WORK FOR THE OPERATING COMPANY IN 2021
Suppose that your holding company has an operating company that performs VAT-taxed activities. Now your holding company wants to actively manage this operating company. In that case, you would be well advised as a DMS to carry out the management activities for the operating company directly on behalf of your holding company. In this way, you make it clear that your BV is a so-called taxpaying holding company. As a result, it is entitled to a deduction of input tax insofar as the services purchased are used for VAT-exempt activities. If you do not succeed in performing work for the operating company in this current VAT period, try to do this 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 interest in this company pro rata.
40. RECLAIM VAT FOR 2020
Have you been waiting a long time for a payment from a debtor? Then you should realise that, as a creditor, you are entitled to a VAT refund within one year of a claim becoming due. You may reduce the periodical VAT return by the amount of the refund. You do not have to submit a separate application to the tax authorities. Have you already had a claim on a debtor for a year? Then ask for a VAT refund.
Suppose that the debtor pays the irrecoverable claim at a later date. In that situation, you will have to pay the previously deducted VAT again.
41. SIGN UP FOR THE OSS SYSTEM
Since 1 July 2021, a VAT entrepreneur has to account for VAT in other EU Member States if the turnover of his distance sales and digital services to consumers from other EU Member States exceeds €10,000 per year. In the event that this threshold is exceeded, a trader can declare the foreign VAT due by means of a new system, the One-Stop-Shop system (OSS system). The Dutch Tax and Customs Administration uses the OSS declaration to distribute the VAT revenue among the countries entitled to it.
Do you, as a VAT entrepreneur in other EU Member States, generate more than €10,000 in annual turnover from distance selling and digital services to consumers? If so, you must register for the OSS return.
42. REPORTING SMALL IMPORTS IN I-OSS
Since 1 July 2021, as a VAT entrepreneur, you can report goods originating from non-EU countries with a value of up to € 150 in an import OSS declaration (I-OSS). This means that the import of goods from non-EU countries is exempt from VAT. This regulation also applies to Norwegian VAT traders and non-EU VAT traders 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 VAT exemption of imports. Do you, as a VAT entrepreneur, receive goods from non-EU countries with a value of up to € 150? If so, report this in an import OSS declaration.
43. FILE A TRANSFER TAX RETURN IN 2022
Have you acquired real estate in December 2021? In that case, file the return in 2022. In 2022, the content of the transfer tax return message (OVB) will be expanded. From then on, the civil-law notary will need to provide more information via the tax return form, such as the BSN and the exemption invoked by the taxpayer. Some of the information that is already sent to the Tax Authorities via the tax return message will no longer need to be sent separately by the civil-law notary to the Tax Authorities. This applies, for example, to the written statement that a private home buyer fills out when applying the starters exemption or the reduced rate. The obligation for the civil-law notary to use the standard form with which a private home buyer makes a written declaration for the application of the start-up exemption or the reduced rate and to send it to the Tax Authorities will also lapse. For civil-law notaries who will fall under the transitional law, the old declaration obligations will remain in force until 31 March 2022 at the latest. If you file a tax return in 2022, please make sure that you submit your tax return in time. In other words, within one month after the acquisition!
Are you a starter, will turn 35 next year and do you want to buy a house with a maximum value of € 400,000? In any case, do so before your 35th birthday. By buying the house in time, you will be entitled to an exemption from transfer tax.
44. RECONCILE ADMINISTRATIONS
Check as soon as possible at the end of 2021 whether the payroll administration and the financial administration are in line with each other. This is important, for example, if one or more (taxed) allowances paid have mistakenly not been processed in the payroll records. In that case, no wage taxes were withheld or final levies paid on these payments. Such discrepancies become apparent when the payroll and financial records are reconciled. Subsequently, you can still pay the payroll taxes owed. This can be done in the form of a final levy under certain conditions.
45. LET EMPLOYEES WITH LOW WAGES WORK 1,248 HOURS
Employers who employ workers with the minimum wage or slightly above are entitled to the low-income benefit. These are employees who earn between € 10.48 (lower limit) and € 13.12 in 2021. The benefit is € 0.49 per hour per employee with a maximum of € 960. Your employee must have at least 1,248 hours of paid employment per calendar year. If your employees meet the conditions, the UWV will pay the benefit to you in the course of 2022. Is it not yet certain whether certain employees will have more than 1,248 hours of paid work? Schedule that employee extra so that your company meets the minimum number of hours.
46. USE WAGE COST BENEFITS
Take advantage of the labour cost subsidies for employees aged 56 and older or employees with a work-limiting disability. If you take on the aforementioned employees, you can receive a labour cost subsidy. For the occupationally disabled employees that you replace and for employees from the target group of the Employment and Training Adjustment Act, you may also be entitled to a labour cost subsidy. The amount of the subsidy depends on the category of employees to which your employee belongs. However, the subsidy amounts to a minimum of € 1.01 per hour paid up to a maximum of € 3.05 per hour paid. The subsidy is maximised at € 2,000 for an employee from the target group of the Employment and Training Opportunities Act and at € 6,000 for the other categories of employees. In order to qualify, you must request a copy of the target group statement from your employee. In principle, your employee must request this statement within three months after the start of the employment.
48. PAY OUT CUSTOMARY BONUS IN 2021
Do you still have free space at the end of 2021? And are you considering giving a bonus to one or more employees? Then include this bonus in the free allowance. One condition is that the bonus must be paid in 2021. Also important: the customary criterion must be met. The bonus may not differ by more than 30% from what is customary for similar employees in the same sector.
The Ministry of Finance will in any event approve a bonus of up to €2,400 per employee per year. Providing proof or substantiation is therefore not necessary. Are you a DGA and is there enough free space? Then you may also grant yourself a bonus of € 2,400.
Do you wish to apply a higher bonus? Then provide proof that such a bonus is customary in your sector.
49. LET YOUR EMPLOYEE DO YOUR CHRISTMAS SHOPPING
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. At least, if the products are not from another sector. Moreover, the discount is only untaxed insofar as it is not too high. As far as the discount per product is higher than 20% of the value of that product in the market or together with other granted discounts is more than € 500, the surplus 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. You may also apply this scheme to former employees whose employment has ended due to retirement or occupational disability.
50. MAKE ARRANGEMENTS NOW FOR WORKING FROM HOME
As of 1 January 2022, employees may give a tax-free allowance to their employees for working from home of up to EUR 2 per day. This may also be a fixed allowance according to a structural homeworking pattern. As an employer, you can either give the home-working allowance or the commuting allowance per day. Therefore, make timely agreements with your staff regarding working from home and the related allowance.
51. SET UP A PERSONNEL FUND BEFORE 2022
Do you want to support your employees in financially tight times or in setbacks by providing them with benefits and allowances? Then it may be interesting to set up a personnel fund in 2021. Payments and benefits in kind from such a fund are untaxed under certain conditions. An important condition is that between the moment of establishment and the year in which the payments are made (with a maximum period of five years), the employer’s contribution does not exceed the total contribution of all employees. You must deduct the employees’ contributions from their net wages.
If you set up a personnel fund in 2021 and withhold the employee contribution from, for example, your employees’ thirteenth month or year-end bonus, you may also make a contribution yourself. Then you can already support your employees in 2021.
52. HOLD STAFF PARTY 2022 ON THE COMPANY PREMISES
Do you want to organise a staff party in early 2022? Then organise it at the workplace. A staff party planned for early 2022 can remain untaxed under the work-related costs scheme if you organise the event at the workplace. This facility relates to both the drinks and snacks (not business meals) that employees consume and the costs of, for example, entertainment. Should you choose an external location, then the staff party and the refreshments are taxed as final pay. And this at the invoice value. Of course, you can use the free margin for this. But in that case, you will already be using this space early in 2022.
The provided refreshments 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 rule.
53. BEWARE OF THE GROUP SCHEME IN 2021
If your company forms a group with at least two group companies, it may be convenient to apply the group scheme. In that case, you no longer need to split the payments and benefits in kind to employees of more than one group entity. You can apply the group scheme when you have a shareholding of at least 95%. If two or more foundations are so intertwined financially, organisationally and economically during the entire calendar year that they form a unity, this also constitutes a group. In 2021, you will have a free allowance of 3% for the first € 400,000 of taxable wages and 1.18% above that amount. When applying the group scheme, you can only use the 3% margin once. Without application of the group scheme, the margin of 3% for each company over the first € 400,000 of taxable wages is 3%. Therefore, please assess whether application of the group scheme is beneficial for you.
Did you apply the group scheme in 2021, but is it disadvantageous in retrospect? In that case, you may opt not to apply the group scheme in 2021, at the latest, when filing the tax return for the second period of 2022.
54. CHECK WHETHER THE SECTOR CLASSIFICATION FOR 2022 IS CORRECT
At the end of 2021, you will receive a decision from the Tax and Customs Administration with the sector classification and the premiums for the work resumption fund for 2022. This sector classification is also important for the right to the Fixed Charges Relief (TVL) and the Business Tax Relief for the affected sectors (TOGS). Check whether the sector classification matches the activities of your business. If you are classified in the wrong sector, this can have major financial consequences.
55. COMPLETE CLOSING OF PAYROLL 2021
The end of the year is approaching, so it is almost time to close the payroll administration for 2021. Take a dynamic approach to this. In any case, the closing must take place before you have to submit the wage tax return for the last period of 2021. Check during the closure whether you have a copy of the identification document of each employee. Also make sure that you have all invoices of benefits in kind and provisions to employees and declarations of expenses reimbursed to employees in order.
56. CHECK RECORDS OF TEMPORARY WORKERS BEFORE 2022
Do you use temporary employees, seconded employees or other employees who are not employed by your company? If so, please check before the end of 2021 whether your administration with regard to these employees is in order. For example, you must have verified the identity of all these employees. Because you are not allowed to ask temporary employees for a copy of an ID document, it is advisable to note down the type of ID document, its number and its period of validity during the check.
You must also check the temporary employment agency’s registration. Do you not comply with this obligation? If you do, the Inspectorate SZW can impose a fine of €8,000 to a maximum of €32,000 per employee (depending on the number of workers made available). These fines may even be two or three times higher in the event of repeat offences!
57. HOLD OFF ON GRANTING SHARE OPTIONS
Are you considering granting your employee stock options? If so, do so after 1 January 2022. If you grant your employees stock options in 2021, these are taxed at the time they are converted into shares. If the employee cannot sell the shares yet, the money is not always available to pay the tax. Therefore, as of 2022, it will be possible to settle with the tax authorities only when the shares are tradable. The employee can then sell part of the shares to pay the tax. Does the employee obtain a benefit from the share option rights between the moment of exercise and the moment of marketability? And have the share option rights not yet left the payroll in that period? In that case, too, the benefit is salary.
The employee may choose between the two settlement moments. It is therefore still possible to link up with the moment of exercise.
58. FORM PROVISION FOR TRANSITIONAL ALLOWANCE
Nowadays, an employee is usually entitled to transitional compensation upon dismissal. This transitional compensation amounts to 1/3rd monthly salary per year worked. The compensation is maximum € 84,000. If your employee’s monthly salary is higher than € 84,000, the transitional compensation for your employee is maximised at the gross monthly salary. Forming a provision for transitional compensation is possible under certain conditions. The expenditure originates from facts and circumstances that occurred in the period before the balance sheet date. The expenditure must also be attributable to the period prior to the balance sheet date. It is also important that there is a reasonable degree of certainty that the expense will be incurred. In order to form a provision, it will in particular have to be demonstrated that there is a reasonable degree of certainty that a transitional allowance will be payable in the future. Think in this context of a reorganisation or a restructuring. Are you having talks with an employee because of his poor performance? Then form a provision if dismissal is unavoidable. Have you formed a provision for a future transitional allowance? Make sure you properly document the reasons for this.
59. PREPARE YOURSELF FOR THE DECLARATION OF CLIENTS
The introduction of the DBA Act will not take place. Instead, a system with a client declaration will be introduced. The intention is that clients can apply for this client statement via a web module. With this declaration clients can safeguard themselves from paying payroll taxes (no employment). This exemption only applies if the questions in the web module are filled out truthfully! The way in which the work takes place in practice must therefore correspond to what is stated in the principals’ declaration. Make sure you have a good understanding of this in time. Incidentally, clients are not obliged to use the web module. The web module is intended as an aid for principals who have doubts about the qualification of an employment relationship.
Currently there is a moratorium on enforcement: the Tax Authorities will not impose any retroactive levies unless there is intentional malice. This moratorium applied at least until 1 October 2021. The State Secretary of Finance has hinted that this moratorium will remain in place for the time being.
60. GET AN A1 DECLARATION QUICKLY
Do you have employees who work in the Netherlands but live abroad? Then the question is in which country these employees are insured for social insurance purposes and whether you have to deduct and pay social insurance contributions for them. You can find out from the social security institution of the country of residence (in most cases Germany or Belgium) which social security system is applicable by applying for a decision. This decision is known as an A1 certificate. An A1 certificate is usually valid for 12 months. That is why you have to apply for a new A1 certificate every year. The end of the year is a good time to take stock of when the current certificates expire. Make an overview of them. If one or more certificates expire on 31 December 2021, you should apply for a new certificate in 2021 if you want to have certainty in 2022 about whether the employees concerned are insured in the Netherlands for social insurance purposes.
61. EXTEND WORK PERMITS BEFORE 2022
If some of your employees are EU or EEA nationals, you must have a work permit or a combined residence and work permit for these employees. These permits are issued for a certain 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 2021. If this is indeed the case, apply for an extension immediately, if desired.
For Swiss employees, just as for EU employees, you do not need a work permit.
62. DESIGNATE THE SALARY THAT FALLS UNDER THE 30% RULE
If you have recruited an employee from abroad, you can, under certain conditions, apply the 30% rule to his/her salary. According to this regulation, 30% of the employee’s gross salary is an untaxed expense allowance. However, the employee must not have lived at less than 150 kilometres from the Dutch border. In addition, the employee must have a specific expertise that is not available on the Dutch labour market or is scarce. The tax authorities assess whether someone has a specific expertise on the basis of their salary. 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 €38,961 will apply in 2021. For employees who do have a university master’s degree but are younger than 30, a minimum wage of €29,616 will apply. Insofar as the wage of your foreign employee is lower than € 38,961 or € 29,616 respectively, you can still increase it contractually. This way, you ensure that you can apply the 30% ruling for the employee. This regulation is valid for a maximum of five years after commencement of employment. Have you not yet designated the wages of your hired foreign employees? If so, do so before 1 January 2022.
The 30% ruling is only applicable after approval (decision) by the Tax Office. Therefore, you have to request the tax inspector to apply the 30%-ruling. This year, case law confirmed that, without a ruling, your employee may not apply the 30%-ruling in his/her personal income tax return if you do not designate 30% of his/her salary as final taxable income.
63. PURCHASE A NEW COMPANY ELECTRIC CAR IN 2021
If a company car is due for replacement and you are considering investing in a new electric car, do so this year. On the additional taxable benefit for private use of an electric company car that will be admitted for the first time in 2021, you may apply a 10% discount. This discount is capped at € 4,000, unless it concerns hydrogen-powered cars. For an electric car that is allowed for the first time in 2022, the discount drops to 6%, with a maximum of €2,100. If you buy an electric car this year and you are the first road user, you can apply the 2021 discount during sixty months after the car was first registered on the road.
If you want to invest in a light electric delivery van, you should know that an investment in such a car entitles you to the environmental investment deduction (MIA) for category I. However, a light electric delivery van will not be eligible for the MIA for more than € 75,000 of the investment amount. The percentage of category I for the MIA will increase from 36% to 45% in 2022. This development may mean that an investment in a light electric delivery van would be better off waiting until 2022.
64. CHECK USE OF COMPANY CAR IN 2022
For the provision of a company car to an employee, you must in principle apply an addition to salary. This addition to the salary reflects the benefit of the private use of the car. However, under certain 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 not to drive more than 500 private kilometres with the company car. Check with your employee before the turn of the year whether the situation will remain the same on January 1, 2022. If your employee drives more than 500 private kilometres with the car in 2022, you will have to apply the additional taxable benefit for private use.
The addition applies per calendar year. Please make your employee aware of this. This way, you prevent exceeding the 500-kilometre limit just before the end of the year. For example, does your employee only drive the company car privately during the month of December and does this involve more than 500 kilometres? In that case, you must still take the benefit of the private use into account for the entire year.
65. KEEP TRACK OF CAR USE IN THE AUTOMOTIVE SECTOR
If you are active in the automotive sector, there is a significant chance that (many of) your employees do not drive the same company car all year. In that case, keep track of which employees drive which cars. Especially with the end of the year in sight, it is wise to check whether you have the registration of the cars and employees in order. In section 4 of the manual on the private use of cars, you will find practical tips for the automotive sector.
66. MAKING THE EMPLOYEE PAY HIS FINES
An employee may commit traffic violations while using a company car. Sometimes the company has to pay the fines in the first instance. If your company is also involved in this, recover these fines from the employee this year. Otherwise, the Tax and Customs Administration may include the amount of the fines in the employee’s wages. Your company then also risks an additional assessment for payroll taxes.
67. CALCULATE THE BPM IN ADVANCE
For 2022, the legislator has clarified the following for the BPM. You owe BPM the moment you register a motor vehicle in the registration register. The vehicle must then be suitable for use on the road. In case of parallel import of, for example, a damaged car, the amount of the BPM depends on the depreciation percentage. That percentage can be based on a valuation report that is made at the moment that the motor vehicle is allowed on the road. If you file a declaration before you are allowed to drive the car on the road, you should base the depreciation on the legal age table or a price list generally applied in commerce.
If it turns out afterwards that you will not be using the car on the road after all (e.g. because the motor vehicle is irreparable), the Tax and Customs Administration will refund the BPM you paid.
68. PUT THE CAR IN YOUR NAME BEFORE 1 MARCH 2022
The government will come up with a separate amendment proposal for a transitional arrangement for a rate change in the BPM. As of January 1, 2022, the taxable event for the BPM is brought forward to the registration in the license plate. This year, this is still the moment of registration. With a rate change, all new motor vehicles that have not yet been registered, must be registered within two months. Has this not been done? Then the new rate applies instead of the old rate that applied at the time of registration. So if you want to purchase new motor vehicles, have them registered in the vehicle register before 1 March 2022.
69. PURCHASE REGULAR CAR IN 2021
If you occasionally purchase a car and pay BPM, the following development is important. The (outgoing) government notes that the income from the BPM is decreasing because cars emit less and less CO2. The amount of the BPM is based on the CO2 emission. In order to counteract the loss of BPM, an adjustment of the tax brackets will take place as of 2022. The disk limits for passenger cars will decrease each year during the period up to and including 2025 by 2.3%, while the disk rates will increase by 2.35%. This also applies to diesel vehicles. As of 2023 and onwards, the rates will first be indexed and then an increase of 2.35% will take place. Therefore, purchase a regular car in 2021.
70. REQUEST A REFUND FOR 2016 QUICKLY
Were you still entitled to an income tax refund for 2016, but forgot to apply for it? In that case, you have until 1 January 2022 to still apply for the refund. The Tax and Customs Administration will only refund you the tax amount if it exceeds the refund threshold. In 2016 this was € 14, instead of the € 15 that applies for 2021.
71. NOTE CHANGES IN IACK
If you have a working income of more than € 5,153 (amount 2021), have no partner or have a partner with a higher working income than you, you are entitled to the income-dependent combination discount (IACK) under certain conditions. Another important condition for the IACK is that a child is registered at your home address, who has not yet reached the age of 12 at the beginning of the year. For 2021, the IACK amounts to 11,45% of the difference between your earned income and €5,153. However, the IACK has a maximum of € 2,815 (amount 2021). Under the current legislation, it is possible that you cohabit with someone who is not your tax partner because he is a non-qualifying foreign taxpayer. Even if this person has a lower earned income than you, you may be entitled to the IACK. The government finds this undesirable and is repairing this ‘leakage’. As of 1 January 2022, a non-qualifying foreign taxpayer can still count as a tax partner for the application of the IACK. As a result, your right to the IACK will lapse if this partner has an earned income that is lower than or equal to your earned income.
72. FLUCTUATING INCOME? APPLY FOR A REFUND BY MEANS OF AVERAGING ON TIME
If you have enjoyed fluctuating box 1 income in three consecutive, fairly recent years, you may be entitled to a refund by averaging. To start with, you must have paid more tax than if you had had an even income in those three years. With averaging, the tax is recalculated for three consecutive years on the basis of the average income. If this tax is more than € 545 lower than the tax paid, you will get the excess back. To obtain the averaging refund, you must submit a request to the Tax and Customs Administration. You can submit the request up to 36 months after the moment on which the last assessment of those three years has been irrevocably established. If you are still entitled to a refund for 2013 through 2015 and the 2015 assessment has a date of 20 November 2018, this will be irrevocably fixed as of 1 January 2019. An assessment is irrevocable if the 6-week period for objection, appeal, higher appeal or cassation has expired. You then still have up to and including 2021 to apply for the refund. You should therefore apply for the refund before 1 January 2022. Various tools are available on the Internet to determine the averaging refund.
73. ASK FOR A PROVISIONAL ASSESSMENT OF INCOME TAX
The Tax Authorities charge interest on an income tax assessment for 2020 that is imposed after 1 July 2021. This interest is currently 4% per year. Compared to the interest the bank pays you, this interest is high. You can limit tax interest by requesting a provisional income tax assessment for 2020 as soon as possible. If you expect to have to make additional payments for 2020, it makes sense to request a provisional 2020 income tax assessment from the Tax Administration as soon as possible.
If you do not pay a 2020 tax assessment or pay it too late, the Tax and Customs Administration will also charge collection interest. This interest comes on top of the tax interest. You should therefore submit a request for a provisional assessment as soon as possible, but if necessary also ask for a payment arrangement. Incidentally, the collection interest up to and including 31 December 2021 is only 0.01% per year, due to the consequences of the coronavirus. After that, the collection interest rate will rise again.
74. MAKE USE OF THE ADDITIONAL € 1,000 GIFT EXEMPTION UNTIL 1 JANUARY 2022
If you make a gift to your (grand)children before 1 January 2022, they can use the annual exemption of € 6,604 (children) or € 3,244 (grandchildren, general exemption). For 2021, these exemptions have been increased by an additional amount of € 1,000, but the government will reverse this increase as per 1 January 2022. Therefore, make a donation this year that matches the exemption.
75. DONATE FOR YOUR OWN HOME THIS YEAR
Do you have children between the ages of 18 and 40? Then they can increase the exemption for gifts from parents to € 26,881. The day of their 40th birthday falls within the age limit. If it concerns a gift to children for a study, the one-off exemption is €55,996. For gifts for an own home, the one-off exemption even increases to €105,302 (amount 2021). The exemption of € 105.302 applies to everyone between 18 and 40 years of age and who uses the money for their own home.
Your child must choose which increased gift exemption he or she wishes to use, the one of € 26,881, € 55,996 or € 105,302. If he chooses for a certain exemption, he can no longer choose for another increased exemption.
You do not have to donate the full amount of € 105,302 in one year. You can spread the unused part over a period of maximum two years, immediately following the first calendar year mentioned. Please note that the application of the increased exemption will be affected if a one-off increased donation has already been made in a previous year.
Even when donating in instalments, the beneficiary may not exceed the age limit of 40 years. Has the person to whom you wish to donate already reached the age of 40, but is his/her partner younger? Then the one-time exemption can still be applied.
76. LET YOUR CHILD COMPLETE HOME MAINTENANCE THIS YEAR
Did your child receive a gift from you in 2019 to improve or maintain his/her own home? Your child probably applied the increased gift exemption of € 102,010 to the gift at that time. A condition for this exemption was that the donation took place under the resolutive condition that the donated amount must be spent on the improvement or maintenance within two years after the calendar year of the donation. Therefore, point out to your child that the work must be completed before 2022, otherwise the exemption will lapse!
77. SUPPLEMENT INCREASED EXEMPTION
Has the one-off increased exemption for a child between 18 and 35 been used before 2010, but not afterwards? In that case, the increased exemption for gifts to children between 18 and 40 years of age for their own home can be applied in 2021. In fact, this is an addition to the previously applied increased exemption. Make use of the additional exemption of € 29,115 in 2021 if the one-off increased exemption for a child aged between 18 and 35 was used before 2010 and not afterwards.
The beneficiary child or its partner must be between 18 and 40 years of age at the time of the gift for the owner-occupied home.
78. FILE A GIFT TAX RETURN BEFORE 1 MARCH 2022
Did you receive at least one donation in 2021 on which you have to pay gift tax? Then you must file your gift tax return before March 1, 2022. You will then in any case be on time. If you want to use the one-time (special) increased exemption for gift tax so that you do not pay anything on balance, you should also submit your tax return on time. In this tax return, you must request 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 will only start the day after the return. In that case, you will have to wait longer before you will have certainty.
You can search and find the gift tax return on the website of the Tax Administration. Or file an online gift tax return via ‘Mijn Belastingdienst’.
79. PAY YOUR ALIMONY BEFORE THE END OF THE YEAR
An alimony payment to your ex-spouse is part of the personal deduction. In 2021, you may deduct the alimony at a maximum rate of 43%. In 2022, the alimony is only deductible at a maximum of 40%. Therefore, make sure that the alimony is deducted in 2021. This means that you must have transferred the alimony by 31 December 2021 at the latest.
An alimony obligation is not a debt that reduces your box 3 capital.
80. PAY OFF ALIMONY OBLIGATION STILL IN 2021
The fact that the partner alimony is deductible in 2022 at a maximum rate of 40% makes it fiscally attractive to buy off the alimony obligation this year. The redemption sum is also deductible.
81. BUNDLE DONATIONS AS MUCH AS POSSIBLE
Donations to charities may be tax deductible. The charity must then be a so-called general benefit-providing organisation (ANBI). Ordinary donations are not fully deductible, however. One of the conditions for the deduction of donations is that they have been paid. There is an amount that is not deductible, a threshold. In 2021, this threshold is € 60 or, if more, 1% of the joint (threshold) income. If you pay all donations in one year, you only have to deal with a non-deductible amount once. It can therefore be wise to pay donations as much as possible in one go.
In addition to a threshold amount, ordinary donations are also subject to a maximum deductible amount. As a donation, 10% of the combined threshold income is deductible at most. Keep this in mind if you want to pay your donations as much as possible in one year.
82. DONATE TO CULTURAL INSTITUTION IN 2021
If you still want to make a donation to a good cause this year, consider making a donation to a cultural public benefit institution (cultural ANBI). This is fiscally more advantageous than a donation to an ordinary ANBI. A donation to a cultural institution provides you with an income tax deduction of 125% of the donated amount, instead of 100%. But the extra deduction of 25% is maximised at € 1,250. Furthermore, a threshold of 1% of the aggregate income before application of the personal deduction, but at least € 60, applies in the same way as for ordinary donations. It is also important to note that in 2022, the maximum effective percentage at which you can deduct donations will drop from 43% to 40%!
If you have your own private limited company, you can also donate to a cultural institution through your private limited company. This provides an additional deduction in corporate tax of 50% of the amount your private limited company has donated to cultural institutions. This additional deduction amounts to a maximum of € 2,500.
83. TURN YOUR REGULAR GIFTS INTO PERIODIC GIFTS
Your annual gifts to an ANBI are only deductible if they exceed a threshold. For 2021, this threshold is at least € 60 or 1% of your aggregate income, whichever is higher. If you have a tax partner, the threshold is 1% of the joint aggregate income. The deduction of donations is also maximised at 10% of the (joint) aggregate income. Are your donations to charities not fully deductible? Then consider converting donations into periodic donations. This means that you write down that you will donate a certain amount for five years, unless you die before then. You no longer need to go to the notary for periodic donations. Periodic donations are fully deductible. If you convert your donation into a periodical gift this year, you will still benefit from full deduction this year.
When the periodic gift depends on the longest living of two donors, the death risk must be at least 1%. Usually, this is not met in the case of a periodic donation on two lives for five years. Therefore, make the donation dependent on the life of one donor.
84. AGGREGATE CARE COSTS AS MUCH AS POSSIBLE
Some healthcare costs, such as dentist, physiotherapist or specialist fees, are tax deductible. But the costs that fall under the compulsory excess are not deductible. At all, healthcare costs are only deductible to the extent that they exceed the threshold. Do you need a hearing aid this year and do you expect a high dental bill next year? Then you have to deal with a threshold both this year and next year. If possible, it is wise to have both the hearing aid and the dentist treatment take place in the same year. You will then only have to deal with a threshold once. That way, more health care costs are deductible for you.
85. CONCLUDE COHABITATION CONTRACT STILL IN 2021
Fiscal partnership can offer certain advantages, for example if one of the partners does not fully use his tax-free assets in Box 3. If you and your partner are not yet each other’s tax partner, you can still arrange to be considered each other’s tax partner for the whole of 2021. In that case, you must at least live together without being married and be registered at the same residential address as of January 1, 2021. In addition, there must be a certain situation. The situation that is easiest to realise in the short term is to conclude a notarial cohabitation contract. Arrange for this before 1 January 2022 and meet the aforementioned conditions. Then you can still be regarded as tax partners for the whole of 2021.
There are five other situations in which one can obtain fiscal partnership for the whole year. Namely, if a child is born from your relationship, one of you has acknowledged a child of the other, one of you is considered a partner of the other in a pension plan, you own a home together with your partner or a minor child of one of you is registered at your residential address. In the latter case, you and your partner must both be of age.
86. IMPLEMENT PERIODIC SETTLEMENT 2021
It happens that spouses who have married on a prenuptial agreement forget to actually execute a periodic settlement clause in those conditions. If the settlement has not been carried out, at the end of the marriage through divorce or death a settlement will take place as if there was a community of property. Are you married on a prenuptial agreement with a settlement clause? If so, do not forget to prepare this settlement statement for 2021 as well.
You can ‘repair’ a periodic settlement clause that has not been executed for years by still calculating the amounts to be settled. Then record the outcome in a settlement agreement. Subsequently you must execute the clause annually or have the prenuptial agreement amended on this point.
87. PAY ANNUITY PREMIUMS IN 2021.
If you are dealing with a pension gap, it may be interesting to take out an annuity. The annuity premiums are tax deductible within certain limits. The deduction of annuity premiums is in the first place limited to the so called annual margin. Besides that, the premium is only deductible when you actually paid it in the year you want to deduct it. Therefore, make sure you paid the annuity premium no later than December 31, 2021.
Did you pay annuity premiums in the past five years, but forgot to mention them in your income tax return? And is the relevant assessment already irrevocably fixed? Then you can submit a request for ex officio reduction to the tax authorities. You must then be able to prove that you have not deducted the premium paid. For example, by submitting copies of your tax returns and the assessments for the years in question. To be eligible for refund for 2016, you must apply for an automatic reduction before 1 January 2022.
88. REDUCE YOUR SAVINGS BEFORE 1 JANUARY 2022
Although the call for changes to the box 3 regime is strong, the government is sticking to the flat-rate system. As the savings interest rate is still very low, box 3 may not be the most favourable box for you. Therefore, consider transferring your savings into a new PLC before the cut-off date of 1 January 2022, transferring them into an open fund for joint account, depositing them as informal capital or share premium in your PLC, or converting them into a claim on your PLC (so-called posting claim).
The examples mentioned do have disadvantages and risks. For example, there are costs involved in setting up a PLC. Check what the best option is for you and whether on balance it is more advantageous than leaving your savings in box 3.
A bill is likely to be introduced which will abolish the corporate income tax obligation for open-ended mutual funds. It will then no longer be advantageous to place your savings in an open fund on joint account.
89. PAY OFF SMALL DEBTS BEFORE THE END OF THE YEAR
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 2021) per tax partner. It is fiscally more advantageous to repay these debts. This way, they will no longer exist on the reference date of January 1, 2022, while the box 3 tax is immediately reduced. Therefore, pay off small debts before January 1, 2022, as much as possible.
90. INCUR MAJOR EXPENSES THIS YEAR
Are your assets so high that you have to pay box 3 tax and do you have enough savings to pay for any expenses in 2021? Consider making large private purchases that you actually wanted to make in 2022, such as buying a new car or new furniture, before the turn of the year. Such possessions do not form part of the basis for the box 3 levy, while the savings you used for the purchase will then no longer form part of the basis on the reference date of 1 January 2022 either. This way, you can save a lot of tax in Box 3!
91. WAIT WITH THE SALE OF A GREEN INVESTMENT
Would you like to take full advantage of the exemptions in Box 3? Then also make use of the exemption for green investments. These investments are exempt up to a maximum of € 60,429 (amount 2021) per person (€ 120,858 for tax partners). Together with the extra tax credit of 0.7%, this will result in a considerable tax saving in Box 3. Do you also want to use this tax benefit in 2022? Then it is important that you own the green funds on 1 January 2022 (reference date). So if you are considering disposing of these funds, you should at least hold on to them until after 1 January 2022.
If you do not have any green investments yet but are considering investing your money in green, you should do this before 1 January 2022 if possible. In that case, you can already benefit from the exemption and the tax credit in 2022.
92. DO NOT INCLUDE THE DECEASED PARTNER’S OWNER-OCCUPIED HOME RESERVE
Anyone who sells a house with surplus value for tax purposes will build up what is known as an owner-occupied home reserve (EWR). An EWR reduces the mortgage debt on which the interest is deductible. Under current law, an EWR passes to the other partner upon the death of one partner. But as of 2022, the EWR rules will be restored to the situation prior to 2013. This means that the EWR will again be linked to the person of the taxpayer and will lapse by operation of law upon death. This also applies to the repayment position. As a result of these changes, a surviving partner will not unnecessarily be confronted with the owner-occupied home history of his/her deceased partner.
93. SELLING YOUR OWN HOME AFTER THE TURN OF THE YEAR
Do you intend to sell your debt-free home soon without immediately buying a new one? Perhaps it is better to wait until 2022. If the sale takes place before 1 January 2022, the sales proceeds will be included in the assessment basis for the capital gains tax in the year 2022 (reference date 1 January 2022). For example, if you sell the house on 5 January 2022, the purchase price will not fall in Box 3 in 2022.
94. FILL IN A TRANSFER TAX DECLARATION ‘UNFORESEEN CIRCUMSTANCES’
If a natural person acquires a property that will serve as his/her main residence, he/she only needs to pay 2% transfer tax (or sometimes even no transfer tax at all). When testing this principal residence criterion, unforeseen circumstances occurring after the acquisition, such as a death or a gift, may now be taken into account. This provision will be further relaxed in 2022. One may also take into account unforeseen circumstances that occur after the sales contract has been concluded, but before the delivery. Therefore, you should submit a completed declaration of transfer tax ‘unforeseen circumstances’ to the notary.
It is very important here that the acquirer had the intention of using the home as his/her main residence before the unforeseen circumstance occurred, but is no longer able to do so due to this circumstance.
95. WAIT UNTIL 2022 TO REPURCHASE HOUSE
As from 1 January 2022, an exemption from transfer tax (OVB) will apply (subject to conditions) for the repurchase of a house from a natural person. The exemption applies if the parties thereby implement a sales regulation clause. Consider the following. A provider of homes sells a home with a (buyers) discount to an occupant. If the provider later buys the property back from the occupant based on the clause, it is undesirable that the acquisition of the property is taxed at the general rate of 8%. If the provider subsequently sells the property to a starter, the provider may not pass on this OVB. This would discourage vendors from reselling to first-time buyers. You can avoid this problem by not buying back the property until 2022.
96. PAY MORTGAGE INTEREST 2022 IN ADVANCE
Will you reach the AOW pension age in 2022, or will you be subject to a lower tax rate in 2022 for another reason? Then pay in 2021 the mortgage interest relating to the period until 1 July 2022. You can then deduct this interest at a higher rate, so that you pay less tax. In addition, the top rate at which you can deduct mortgage interest will drop from 43% to 40% in 2022.
Paying for a longer period in advance is useless. If you do, the inspector will reject the prepaid interest as a deduction item for 2021.