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Coronavirus, companies and the 30% ruling: Dutch tax news update

There has been a flurry of tax related news in recent weeks, as we head towards the end of 2020.  Here is a round-up of the main news you should be aware of.

Company coronavirus problems – tax deferral scheme reopened

Hot off the presses earlier this month was a decision by the finance ministry to give companies struggling with coronavirus issues more time to pay their tax bills.

If you are self employed or are a company owner and are having difficulty paying your tax bills because of financial problems caused by Covid-19, the government has decided to extend the deadline for deferment to January 1.

If you apply and are granted a deferment on your tax payments, you will have up to three years to pay the taxes you still owe. Your tax advisor can help you sort this out.

30% ruling ends this year – what to do?

Many people will lose their 30% ruling benefit at the end of this year, and may be asking themselves if they need to take any action. ‘That depends on several things,’ says Arnold Waal, of tax advice company Orange Tax. ‘The change means you will have a lower net salary – in other words, less to spend – and you will also have to report your worldwide assets to the Dutch tax authorities.’

Foreign property is not a problem, because of double taxation rulings, and any rental income is not taxed in the Netherlands, Arnold says. ‘But you will have to report your other bank accounts, and any investments you have – although they too may not be considered assets. You will need to consult a tax advisor to make sure that this gets properly sorted out, and don’t take any rash decisions until you have done so.’

183 day rule – I exceeded this year due to Covid19, is that a problem?

The 183 day rule in the tax system has been around for some time, but has become current this year because of coronavirus. Basically the rule says that if you live outside the Netherlands for more than 183 days, your tax status in the Netherlands will change.

Some international workers in the Netherlands have found themselves stuck abroad because of coronavirus and may be worrying about the impact on their taxes in the Netherlands. Others may be in a low tax country and see opportunities to benefit.

‘The Dutch tax office considers Covid-19 to be an act of God, and that means you can be forced into lockdown abroad for a very long period without it changing your tax status,’ says Arnold Waal. ‘But you should keep evidence to prove you are stuck in a lockdown because the tax office could ask you questions about it long after the Covid19 period has been forgotten.’

Terminate your company before the year end, or start a new one

If you have a BV or a sole proprietor company and you no longer use them, make sure to terminate them before December 31. The reason is simple. If the company is continued into January or February of the next year, you will be expected to comply with the regulations for entrepreneurs for the full year.

A tax advisor which specialises in small firms, such as Orange Tax can help you deal with winding down your company if necessary.

Similarly, if you are considering starting a BV, or limited company, there is no time like the present. You don’t have to wait for the next calendar year as a cost cutting measure because the notary who sets up your company can make your first financial year an extended one, so putting the extra couple of months into 2021’s tax return.

Update your mortgage tax relief claim

Other tax issues to take care of before the end of the year include sorting out your mortgage tax relief status for 2021 – to make sure you don’t end up being asked to hand over more money to the tax office at a later date.

Several things have an impact on the size of the deduction, not least of which is the government’s decision to cut the tax rate you can deduct the interest against by a further three percentage points.

If you have being paying off the loan, or principle, this too will reduce the size of the deduction. Check with an expert to make sure that you are dealing with your mortgage properly, especially now interest rates are so low.

Tax is exciting – zoom meetings

You might consider tax issues both boring and things you would rather forget about, but an enthusiastic tax advisor can make all the difference. Orange Tax, for example, has taken ‘tax is exciting’ as a slogan because of their passion for the subject.

‘Tax can be a bit like a puzzle, and it is a great feeling when the last piece falls into place and you have made your client both happy and a bit better off,’ says company founder Arnold Waal.

Orange Tax is currently offering online meetings to clients so they can ask questions and share their concerns in the most personal way possible, given the current restrictions. Contact them directly to find out more.

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