Measures for companies
The plans for the coming year were officially announced on Prince’s Day. Mazars created a list of the most important (fiscal) proposals from the 2020 tax package for you. What’s changing for you?
High corporate tax rate will not be lowered in 2020
The high corporate tax rate will not be lowered in 2020 after all. The high corporate rate will stay at 25% in 2020. The high rate will be decreased to 21.7% on 1 January 2021. The planned decrease of the low corporate tax rate will move forward. This rate will be lowered to 16.5% on 1 January 2020, and further lowered to 15% on 1 January 2021.
No tax interest if corporate tax return is submitted on time
Tax interest will no longer be levied over corporate tax returns that were submitted on time. This measure is already being applied for tax returns concerning time periods starting on or after 1 January 2019. The corporate tax returns is submitted on time if it was submitted before the first day of the sixth month after the end of the time period the return pertains to. If the financial year is equal to the calendar year, that day is 1 June. Before, interest tax was levied in such cases, i.e. if the return was submitted after the first day of the fourth month after the end of the financial year.
Repeal of corporate tax payment discount
If taxpayers pay the owed tax in one go, rather than in monthly instalments, there are certain cases in which they will be granted discount by the Dutch Tax Authority. The payment discount for the corporate tax rate will be repealed on 1 January 2021.
New insurance tax exemptions
Two new insurance tax exemptions will be implemented. The first exemption concerns so-called absenteeism insurances and insurances as part of the Return to Work Scheme for the Partially Disabled (WGA) or Sickness Benefits Act own-risk-carrier’s insurance (Ziekteweteigenrisicodragersverzekeringen). This will bring the law into line with the original intention of the legislator and current practice. The second exemption concerns comprehensive weather insurance, an instrument for active farmers to cover previously uninsurable weather risks. The exemption from insurance tax should make it more attractive for active farmers to take out comprehensive weather insurance.
Banks must have at least 8% equity
The cabinet will introduce an interest deduction limitation for banks that are funded by too much borrowed capital. This is the case if the borrowed capital amounts to more than 92% of the balance sheet total. Foreign exchange results (on interest) due to loans and results on hedging instruments for interest and foreign exchange results pertaining to loans do not count as interest for this deduction limitation.
Increase innovation box rate
If companies (e.g. BVs, NVs, etc.) make a profit from innovative activities, they have to pay less corporation tax on this part of the profit. These innovative profits are subject to the so-called innovation box. The effective tax rate for the innovation box will be increased from 7% to 9% from 2021.
Reduction of the deduction for the self-employed
In order to reduce the difference between the self-employed and employees, the self-employed deduction will be reduced in eight steps of € 250 and one step of € 280 by 2020, from € 7,280 in 2019 to € 5,000 in 2028. This means that the deduction for the self-employed amounts to approximately two thirds of the current level. The fact that the phasing out of the self-employed deduction is accompanied by measures to reduce expenses (such as the increase in the labour tax rebate) means that in most cases, self-employed individuals will be likely to see their conditions improve until 2028.
Exclusion of periodic penalty payments and fines
From 1 January 2020, the non-deductibility of administrative penalties and comparable foreign penalties will be regulated in income tax. By means of an existing transitional provision, the legislator has ensured that these periodic penalty payments are not deductible for corporation tax either. The same applies to fines imposed in a criminal ruling.
Prohibition of designation fines and periodic penalty payments
If an employer reimburses his employee for a fine or an administrative penalty imposed by a court order, this compensation is part of the taxable salary. The employer may not designate such reimbursements as elements of the final levy. The same applies to the reimbursement of foreign penalty payments that can be compared to Dutch administrative penalty payments.
Want to know more?
Would you like to know more about the 2020 Tax Plan, the proposed changes and what this means for you? If so, please contact us via email or by phone: +31 (0)88 277 15 00. We would be happy to assist you.