A wide range of tax changes come into effect this month. Here’s a round up of the main changes likely to have an impact on international workers, compiled by tax specialists Blue Umbrella.
There will be some saver-friendly changes to ‘box 3’ next year, where your savings, assets and small investments are taxed. Currently, the asset tax kicks in if you have more than €30,846 in savings, or €61,692 together with a fiscal partner. But next year, the threshold will rise to €50,000 for an individual (or €100,000 for partners).
Most people in the Netherlands are thought to have around €20,000 in savings but there will be positive impacts for particular groups. ‘It could make it easier for starters in the housing market to buy their first house,’ said a Blue Umbrella spokesman. ‘Or people who have savings who might be about to start a pension could benefit most.’
The statutory tax on your asset position above the new threshold will rise from 30% to 31%. But look out for further ‘box 3’ tax reform in future: the Dutch Supreme Court has ruled that the tax has infringed EU law because the ‘income’ from savings and investments is taxed too excessive with the fictional rate of return.
Small business boost
Corporation taxes will be cut for small firms from 16.5% to 15% if they have a net profit of less than €245,000 a year. This profit window will rise to €395,000 by 2022, providing a further boost for entrepreneurship, and there will be extra perks to compensate for money used to invest in the business.
However, controversial plans to cut corporation taxes for large companies will not go ahead, so this rate will remain at 25% (while multinationals are also more ‘fairly’ taxed).
The tax on electric cars bought for private use will rise from 8% in 2020 to 12% from 1 January 2021. The new maximum car catalogue price for this advantageous tax rate will also be €40,000 next year (instead of €45,000 in 2020). Cars over this value will be taxed at the usual rate of 22%.
Measures to support businesses which have lost income due to the coronavirus will be extended into 2021. The so-called NOW rule will help pay staffing costs if your business expects a loss in revenue of at least 20%, for instance, and the third phase of this boost is currently due to last until July.
There is also a scheme to help freelancers (Tozo), and loans for start-ups and scale-ups (COL). Your business may also be able to postpone paying some taxes, and you can apply for this benefit up to 31 March 2021.
There have been noises about scrapping this benefit, but professional educational expenses will still be tax deductible against income. This means the obligatory costs, for example of a Master’s degree, could be set against future income (but not extras such as a laptop). It may be to your advantage to pay the fees for a longer course all in 2021, rather than multi-year installments.
An employer will also be able to provide retraining courses once a job has ended, free of tax.
Tax for all
The basic rate will be cut from 37.35% this year to 37.1% in 2021 for income up to €68,507 (and this rate will continue to drop until it reaches 37.03% in 2024). However, the tax credit for self-employed people will be reduced to a maximum of €6,670 as part of a movement to make staff jobs more attractive. Still, people who are working will have an increased tax credit of €4,205 in 2021 (compared with €3,819 this year).
If you’re between 18 and 35 and looking to buy your first home (in the Netherlands), 2021 is the time to do it: there will be no transfer tax for you at all, in order to help people get on the housing ladder. Investors, however, will have to pay an increased rate of 8%, instead of the current 6%.
And looking ahead to 2022? While the coronavirus is pounding the economy, our experts predict, the tax climate for small businesses and individuals should stay rather milder than the Dutch weather.
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