Measures for (high net-worth) individuals

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?

Reducing citizen’s burden

The government wants to reduce the burden on citizens. The Tax Plan 2020 bill contains various measures that reduce income tax and make (more) work even more rewarding. These include the accelerated introduction of the two-bracket system. The introduction, initially planned for 2021, will be implemented already in 2020, with a base rate of 37.35% and a top rate of 49.5% for 2020. It also increases the labour discount and the general tax credit. The increase in the overall tax credit is positive for lower incomes.

New income tax rates

Taxpayers who have not reached the retirement (AOW) age by the beginning of 2020 can, in principle, expect two brackets in terms of impact. The following percentages include national insurance contributions. A different tariff structure applies to those who are subject to different national insurance contributions.

Box 1 - 2020 rate

Taxable income over (€)

but not more than (€)

2020 Rate(%)

Low rate bracket

-

68,507

37,35%

High rate bracket

68,507

-

49,5%

Modified tax credits

Only the changes in tax credits as proposed (or mentioned) in (the Explanatory Memorandum to) the 2020 Tax Plan bill are included below. In principle, lower rates apply to persons who reached the retirement (AOW) age.

Tax credits

2019 (€)

2020 (€)

General tax credit maximum (< AOW age)

2,477

2,711

Max labour tax credit

3,399

3,595

Income-dependent combination discount maximum

2,835

2,881

Young disabled discount

737

749

Transitional rights of annuities balance

On the basis of old transitional law (2001), taxation on old annuity payments will only take place after the payments exceed the non-deducted contribution. This scheme was to end on 1 January 2021, with a settlement obligation arising on the transfer of the policy from box 1 to box 3. Tax should be paid in one go on the policy value minus the non-deductible contributions. It is proposed that the scheme should continue to exist after 1 January 2021 without any obligation to settle. This also applies to certain foreign pensions. Pure balance annuities, for which no deduction of the deposit could take place at all, will have to be transferred to box 3 with a settlement obligation as of 1 January 2021.

Tax interest on inheritance tax

No tax interest will be calculated if, for the first day of the ninth month after a death, a inheritance tax return is submitted or a request for a provisional assessment is made, and the assessment is issued in accordance with the return or the request. It has been proposed to apply this rule also in situations where the tax return period does not start on the day of death, for example if there is uncertainty about the person of the heir due to a pregnancy. The return or the request for a provisional assessment must then have been submitted within the return period that applies in the situation in question.

Repeal of tax deduction on education expenses

With the introduction of the Labour Market Incentive Subsidy Scheme (STAP), the tax deduction of training expenses will be repealed without utilisation of transitional law. At the moment, only the contours of this new subsidy scheme are known. The end of the income tax deduction will be equal to the date of entry into force of the STAP. It is assumed to be 31 December 2020. As a result, you will be able to make use of the tax deduction for educational expenses until at least 2020.

Increase in energy tax on natural gas

The government wants to adjust the energy tax rates by taxing natural gas more heavily and electricity less. The aim is to stimulate investments in making homes more sustainable, as such investments will pay for themselves faster as a result of the adjustments to the rates. The government is also increasing the tax reduction on energy tax. The main beneficiaries are households. The energy tax in the first bracket on natural gas will be increased by 4 cents per m³ in 2020. In the following six years, this rate will be increased by 1 cent per m³ each year. The rate for greenhouse horticulture will also be increased proportionally in the first bracket, by 0.642 cents per m³ in 2020 and by 0.161 cents per m³ in the following six years.

Changes to the landlord levy rate

Because of the exemption for temporary housing, the government proposes to increase the rate of the landlord levy by 0.001 percentage point as from 1 January 2024. This increase will be reversed effective 1 January 2037.

Advantage for new builders in scarcity areas

If a landlord starts building a house in a designated scarcity area on or after 1 January 2020 and realizes this house within five years, he can save himself the landlord levy. In that case, the house must have a rent below the lowest capping limit in the rent allowance. The minimum investment costs must be € 62,500. If the landlord meets these and a few other conditions, then the tax reduction will be, in principle, € 25,000 per house.

No landlord levy for temporary property

Under certain conditions, an exemption from the landlord levy applies to temporary homes built between 2020 and 2024. In this context, a dwelling is temporary if the environmental permit to be issued for it expires after a maximum of fifteen years. In addition, the licence holder must re-establish the status quo by that time.

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.