We have made a selection of the most important tax tips and points of attention for you and your organisation. Our selection is based on the 2022 Tax Plan package up to and including the Memorandum of Reply to the Senate of 26 November 2021..
Tips based on previous and other pending legislative proposals are also discussed, and tips related to (temporary) approvals in the framework of the COVID-19 crisis.
At the end of December 2021, after the voting in the Senate (‘Eerste Kamer’), it will be clear if all measures from the 2022 Tax Plan package will actually apply. We follow all developments closely and inform you about them.
If you have requested a special deferral of payment (BUVB), you will have to pay your tax debt in 60 monthly instalments as from 1 October 2022. Because all BUVB stops as of 1 January 2022, you have to resume all payment obligations from that date again. This includes payment obligations that have their origin in the period before 1 January 2022, such as the obligation to pay VAT or payroll taxes for December 2021 or the fourth quarter of 2021.
As a result of COVID-19, the recovery interest rate has been temporarily reduced from 4 per cent to 0.01 per cent as of 23 March 2020. This reduction will last until 30 June 2022 and the interest rate will gradually increase as from 1 July 2022.
Tax interest has also been temporarily reduced from 8 per cent for corporate tax and 4 per cent for other taxes to 0.01 per cent as a result of COVID-19. This reduction lasted only until 1 October 2020. From that date, the 4 per cent rate will apply to all taxes. The rate of tax interest for corporate income tax will increase again to 8 per cent as of 1 January 2022.
As a rule, dividend tax and tax on games of chance can be set off against the corporation tax owed. In the French Sofina case, the Court of Justice of the European Union concluded that the method of crediting French dividend tax is contrary to EU law. As this conclusion could, in certain circumstances, also be drawn in the Netherlands, a decree had been issued approving the refund of withholding tax to non-resident entities. However, as non-resident entities often owe little or no corporation tax, the difference had to be refunded. This decree will be temporarily restricted as of 1 January 2022. This limitation implies that in specific situations, settlement of advance tax payments is only possible up to the amount of corporate income tax to be determined.
It is therefore advisable for non-resident entities to check before 1 January 2022 whether a request for a refund of withholding taxes can still be made. For the sake of completeness, we note that the withholding taxes that have not been settled will be carried forward to later years. The period within which the tax inspector is authorised to adopt a (revision) decision on the advance tax payments to be rolled forward has been extended from five years to twelve years if corporate income tax on foreign profits is reclaimed.
Due to the current low interest rates, it may be attractive to agree to a new (lower) interest rate with your bank or to refinance your mortgage. Usually, however, you will have to pay early repayment charges or incur other costs, such as for a notarial mortgage deed or property appraisal costs. In 2021, these early repayment charges and costs are still deductible at 43 per cent. In 2022, this percentage will become 40 per cent. If you want to make use of the higher deduction percentage, update your mortgage before the end of the year.
Do you and your partner own a home together, but do you each have a different ‘history of ownership’? Then you should re-assess whether you are entitled to a higher deduction as from 2022. A different home ownership history occurs if you and/or your partner have previously owned a home separately from each other, as a result of which, for example, the rules for increased mortgages (the so-called 'bijleenregeling') or the limitations for the interest-free mortgages differ for the both of you. From 2022, it will be possible in certain cases to calculate the amount of mortgage interest deduction for you jointly in connection with this 'history'. As a result, interest that is currently not deductible, may be deductible for one of you as from 2022. If this is the case, you can amend your Provisional Refund in 2022 to immediately reduce your joint net monthly expenses.
Debts of a managing director-major shareholder (in Dutch: “dga”) and their partner to their own BV - to the extent that these debts exceed EUR 500,000 - will be taxed in box 2 as from 2023 as a dividend payment at the rate of 26.9 per cent. The same applies to debts of direct family members and their partners. Existing and new debts relating to one's own home are exempt from this measure. It may be wise for you as a dga to phase out any excessive loans now. You have until 31 December 2023 to do so, this is the first application date for this rule.
Did you study or follow a course in 2021? If so, you can still deduct the training costs for your personal income tax return in 2021. This tax deduction will lapse on 1 January 2022. The deduction will then be replaced by a subsidy scheme (Stimulans van de Arbeidsmarktpositie or STAP budget) for persons with a link to the Dutch labour market.
Do you live in Belgium, Germany or another country but normally work in the Netherlands? If so, working from home as a result of the COVID-19 crisis may affect your tax and social security position and the employer obligations. To provide some certainty, most EU and EEA countries adhere to a more relaxed policy due to the change in work pattern up until 31 December 2021. We advise you to check your tax and social security position as this policy differs somewhat from one EU/EEA country to another.
Moreover, based on bilateral agreements employees who live in Belgium and Germany have, under certain conditions, the right to choose whether the days they work from home should be taxed in their country of residence or their usual country of work. This choice can be made when filing the Dutch 2021 income tax return. These mutual agreements have been extended until 1 January 2022, however whether these agreements will be extended again is unclear.
In May 2020 it was announced that the tax treatment of foreign directors’ and supervisory directors’ fees paid to residents of the Netherlands would change. Currently, it is possible to request relief for double taxation for the remuneration received as a director on the basis of the exemption method. This policy will be revoked, as a result of which the double taxation relief will have to be applied based on the credit method. The announced change will lead to a higher tax burden on the income of many directors of foreign companies who reside in the Netherlands. The date on which the approval to apply the exemption method will be withdrawn is not yet known. It is possible that the change will take effect on 1 January 2022. For further explanation please read our article: ‘Dutch tax treatment of foreign remuneration board members: changes announced’.
For the income-dependent combination discount (in Dutch: IACK), only people without a tax partner (singles) or individuals who have a tax partner with a higher income will receive an income-dependent combination discount (in Dutch: IACK). If you work in the Netherlands but live abroad, your partner abroad does not count as a tax partner for Dutch tax purposes. As a result, you may have unintentionally been granted the IACK. The scheme is now being amended, so that your partner abroad will be included as your tax partner for the purposes of the IACK. This change will enter into force as of January 2022 and will be applicable as of that calendar year.
If you do not live in the Netherlands, it is possible that due to the COVID-19 crisis you are or were working from home for a longer period of time and that you have hardly or not been in the Netherlands during the whole calendar year. Therefore, we advise you to check whether your 30% ruling is still valid and/or whether you will have to re-apply for the ruling. Although in many situations the 30% ruling continues automatically, in some cases you may need to apply for a new ruling.
If you make payments to third parties, please note that as of 1 January 2022 you may have additional administrative obligations. The current form used to request information regarding payments to third parties (the IB-47 form) lacks the legal basis to request the citizen service number (BSN). Therefore, a new and broader reporting obligation will enter into force on 1 January 2022 for parties with administrative duties.
Update: On Wednesday 10 November 2021 the Secretary of State indicated that this legislative proposal will be delayed while certain matters are looked into. When and in which manner this legislation will be introduced is currently unknown, although an amended proposal is expected in 2022. Under theinitial legislative proposal, the taxable moment of employee share options would be amended. The legislator had presented this amendment as a solution for liquidity problems regarding non-marketable shares (i.e. a sale restriction applies over the shares, which have been acquired by exercising the share option right). The moment of taxation would be shifted to the first moment at which the shares could be sold, unless the employee opted for exercise as the taxable moment.For further explanation please read our previously published article: ‘2022 Tax Plan: Stock options more attractive as remuneration’.
Under conditions, in 2021 employers are allowed to continue to pay the fixed travel expense allowance tax-free, even if the employee works from home. The government has indicated that this measure will continue until 1 January 2022. We advise you to draw up a new policy for the reimbursement of travel expenses for 2022, anticipating more structural working from home.
Since employees are working from home more often due to the COVID-19 crisis, the government has decided to introduce an exempted ‘working from home’ allowance. As of 1 January 2022, you can therefore reimburse your employee’s extra costs for working from home up to a maximum amount of EUR 2 per day. Please note however that you cannot apply for both the working from home allowance and the travel allowance for the same working day. We advise you to have a clear view on your employment benefits before 1 January. For further explanation please read our article: ‘2022 Tax Plan: Tax free allowance for working from home costs’.
As a result of the COVID-19 crisis, the work-related expenses budget for 2021 has again been increased from 1.7 per cent to 3 per cent for the first 400.000 euros. Above the limit of EUR 400,000 of the wage bill, 1.18 per cent applies. Check whether you have correctly processed the reimbursements and benefits in kind given to your employees in 2021 for the work-related costs scheme. Also check whether you still have room left to make optimal use of the scheme, for example by exchanging gross wages for net wages.
Following the withdrawal of the Job-related investment discount scheme (BIK), the legislator has used the reserved budget for the BIK to introduce a temporary reduction of the employer contributions under the Unemployment Benefits Act (AWf). This reduction of the AWf contribution was introduced as of 1 August 2021. In case of filing the wage tax returns every four weeks, the effective date the discount applied was as of 16 August 2021.
More specifically, up to 31 December 2021 the low rate of the AWf has been reduced from 2.7 per cent to 0.34 per cent. This rate applies to employees with an employment contract for an indefinite period of time. The high rate of the AWf, applicable to employees with a temporary employment contract, has been reduced from 7.7 per cent to 5.34 per cent. In other words, a total decrease of 2.36 per cent applies for both rates. Make sure to check whether the adjusted rates have been correctly applied in your wage tax administration and whether all administrative documentation necessary for the application of the lower AWf rate is available..
Depending on your situation, the formation or termination of a fiscal unity for corporate income tax purposes can be advantageous for your company. Advantages of joining a fiscal unity are, for example, that you only need to file one tax return for all joined companies, that transactions between the joined companies can take place without taxation and that losses and profits within the fiscal unity can be offset against each other without any restrictions. Depending on the situation of your company or organisation, sometimes independent tax liability for the various companies can be advantageous. Your organisation can then, for example, use the rate step-up for all companies for the first 395,000 euros of profit on which 15 per cent corporate income tax is levied (2022). On the excess, your company pays 25.8 per cent; a rate advantage of 10.8 per cent. A fiscal unity can use this rate step-up only once, namely for all joined companies together rather than for each company separately. In addition, there are a number of rules that apply above certain thresholds, as a result of which independent taxpayers may be better off. These include interest deduction limitations (see also the tightening of the earnings stripping measure below) and the proposed rules for loss set-off. Ending a fiscal unity can also be administratively practical if you expect to sell a company from the fiscal unity in 2022. On the other hand, there are the well-known benefits of being part of a fiscal unity.
Currently as a main rule, losses can be carried forward six years. After that period, losses that have not yet been set off are forfeited. It is possible to prevent loss forfeiture as of 2021 by taking measures in 2020, for example by releasing a reinvestment reserve. The principle of sound business practice also offers some scope. The government has proposed unlimited loss carry-forward, as a result of which loss forfeiture would no longer be an issue from 2022 onwards. In addition, there will be a limit on the amount of losses (both forward and backward) that can be set off in a year, namely up to a maximum of 50 per cent of the taxable profit in a year. However, up to EUR 1 million in taxable profit, you will be able to offset your losses in full. Read more in our article 'Loss relief becomes limited to 50% of the annual profit’.
Due to the COVID-19-crisis, the interest on corporate tax for the period from 1 October 2020 to 31 December 2021 has been set at 4 per cent, instead of the original level of 8 per cent. From 1 January 2022, this tax interest will be eight per cent again.
The so-called ‘arm's length principle’ aims to ensure a market-conform distribution of profits within groups. Since not every country applies this principle (in the same manner), this can lead to a part of the profits of a multinational company not being taxed. This type of mismatches is now being addressed. In short, the measure entails that no 'minus' can be claimed for tax purposes in the Netherlands if there is no corresponding 'plus' abroad. Assess whether there are any informal capital situations in your organisation that would be affected, and rearrange them if necessary. Read more in our article ‘2022 Tax plan: Preventing mismatches when applying arm's length principle’.
From now on, reverse hybrid entities (transparent according to Dutch law but non-transparent according to foreign law) will be liable to Dutch corporate income tax. This measure stems from the EU ATAD2 Directive. Furthermore, the concept of affiliation is to be extended to natural persons. This applies to all ATAD2 measures, so also to the measures already introduced for hybrid mismatches. Read more in our article ‘2022 Tax Plan: Introduction of CIT liability for reverse hybrid entities’.
The deductibility of on-balance interest expenditure (interest cost minus interest income) is to be limited to 20% (currently: 30%) of the EBITDA. The current threshold of 1 million euros will be maintained for the time being. The tightening may limit the amount of interest that can be deducted each year and increase your company's tax burden. It may also affect the deferred tax position in your financial statements (in connection with any deductible interest to be carried forward). It may be advisable not to enter into a fiscal unity, so that each company can independently use the franchise for tax purposes and also bear any non-deductible interest charges. In other cases it may be better to form or expand a fiscal unity, so that the EBITDA of this group becomes available to calculate the 20% leeway.
The set-off of dividend withholding tax and gambling tax against corporate income tax will be limited up to the amount of corporate income tax due before the set off. Taxes that cannot be set off in a year are carried forward to future years without time limitation. The term within which the tax authorities can adopt a (revised) decision regarding withholding taxes to be carried forward, is extended from five to twelve years in the event of an additional claim from CIT on foreign profits.
From 2021 onwards, interest and royalty payments you make will, in certain cases, be taxed in the Netherlands at a rate of 25 per cent (withholding tax, 25.8 per cent from 1 January 2022). The withholding tax relates in particular to interest and royalty payments made to group companies established in low-tax jurisdictions. By considering this in advance, you may be able to avoid this and make your corporate structure more future-proof. A similar type of withholding tax will become due on dividend payments from the Netherlands in 2024.
Hybrid entities are no longer liable for tax at source if none of the underlying parties (whether via a collaborating group or otherwise) has a qualifying interest in the hybrid entity. This change is intended to have retroactive effect up to and including 1 January 2021.
The concept of “permanent establishment” will be broadened to include the source taxation on interest and royalty payments attributable to specific Dutch sources, such as real estate located in the Netherlands and rights related thereto, certain profit participating rights, specific debt claims on companies established in the Netherlands and specific activities.
The own-initiative bill ‘Dividend tax on the transfer of the head office’ is designed to tax (latent) profit reserves in the event of emigration or cross-border reorganisations to countries that do not impose a dividend tax claim on these profit reserves. The bill would have retroactive effect to 18 September 2020, which has since been removed from the bill. There are still many questions about the compatibility of this bill with EU and treaty context. Nevertheless, it is advisable to keep an eye on this development if you ever wish to relocate your company abroad or carry out a cross-border reorganisation (cross-border merger, demerger or share merger). Read more in our article ‘Dividend exit tax for companies proposed'.
Entrepreneurs who supply goods or provide services directly to private consumers within the European Union can use one of the One Stop Shop schemes (i.e. the import scheme (IOSS), Union and non-Union scheme (OSS)) as of 1 July 2021. The (I)OSS schemes are introduced to report and pay VAT due as a result of certain Business to Consumer ( B2C) transactions in different countries in one VAT return in one country.
The VAT amount reported in the OSS VAT return for a certain EU Member State can result in a VAT amount receivable, for example because of return shipments. With retroactive effect as of 1 July 2021, a negative ‘OSS VAT return’ (One Stop Shop notification) will automatically be regarded as a VAT refund request. Consequently, the (foreign) entrepreneur who applies one of the three OSS schemes, does not have to file a separate VAT refund request in the Netherlands.
If you have B2C transactions leading to VAT payable in different EU countries, we recommend to assess your VAT position to determine if your compliance requirements can be simplified.
The existing gift exemptions for children and other recipients will be increased by EUR 1,000 but only for the year 2021. With this crisis measure, the exemption from gift tax per child for 2021 amounts to EUR 6,604 for gifts from parents and the exemption for other recipients for 2021 to EUR 3,244. Through this increase in the exemption from gift tax, private donors such as family and/or friends can help an ailing entrepreneur to get through the COVID-19 crisis.
The legislation accompanying the new Pension Agreement will enter into force on 1 January 2023. This is a year later than anticipated. As of 2022, you will have to make important choices about your employees' pension scheme. You are obliged to change all pension schemes to a defined contribution scheme in accordance with the new legislation. You will also have to adapt current defined contribution schemes.
As an employer, you are responsible for completing a draft transition plan by 1 January 2025 at the latest. This is a decision containing a description of the new pension scheme, the necessary compensation scheme and possibly the valuation of old pension rights. In most cases, the employer is also obliged to set up a compensation scheme. The choices made must be substantiated both qualitatively and quantitatively. The changes should be completed by 1 January 2017.
In 2019, a bill has been introduced for a new regulation on the division of pension in the event of divorce. The plan is to break the pension tie between ex-partners by converting the right to a partner's pension and old-age pension into an independent pension entitlement on his/her own life by default. Spouses can deviate from the statutory regulation in prenuptial agreements or a divorce covenant. The bill provides a limitation of what deviating arrangements spouses can make. This bill may have consequences for existing prenuptial agreements, for example if these agree to follow the current 'standard' Pension Equalisation Act. After the bill enters into force, such equalisation will no longer be possible. The new rules were to apply to divorces as from 1 January 2021, but this effective date has been postponed for the second time. The intended date of entry into force is currently 1 July 2022.
The life-course savings scheme has been subject to transitional law since 1 January 2021. This transitional period expires on 31 December 2021. If the transitional law was applicable to you, you could save tax-free up until 31 October 2021. If you still have a life-course credit balance with a bank, insurer or investment institution on 1 November 2021, this credit balance will be paid out to you by your financial service provider by the end of 2021. The moment of taxation is linked to the payment date, being 1 November 2021. The financial service provider withholds the wage taxes on your behalf. The taxes are calculated over the fair market value of your entitlement.
The additional taxable benefit for private use of an electric company car will increase from 12 to 16 per cent in 2022. This additional tax percentage applies from the year that the car is registered in the license plate and remains applicable for a maximum of five years. The price ceiling will go down from EUR 40,000 to EUR 35,000 in 2022. If the car has a list price higher than this ceiling, an additional tax rate of 22 per cent will apply.
Would you like more information about the application of one or more tips and attention points? Or do you need advice? Please contact your PwC adviser. They will be happy to help you.
Taxmanager Knowledge Centre, PwC Netherlands
Tel: +31 (0)63 024 66 06
Corporate Tax Manager, PwC Netherlands
Tel: +31 (0)65 163 90 79
Rotterdam, PwC Netherlands
Tel: +31 (0)88 792 43 51