Budget Day 2014 Dutch Tax Package

Transcription

1 Foreword Employer and Business Pensions Budget Day 2014 Dutch Tax Package 16 September

2 Foreword Employer and Business Pensions Foreword The King s speech and the Budget Memorandum contain - albeit cautiously expressed - good news. While the recovery of the economy is fragile, it is continuing, and public finance is back in line with European budget standards. There is some scope for burden reduction once more. When looked at closely, the 2015 Tax Plan contains few surprises. Many of the measures had already been announced or leaked. The minimal employment tax cuts are very disappointing. The picture will look a little rosier for s, but not much has changed for employers. In the parliamentary paper Keuzes voor een beter belastingstelsel (Choices for a better tax system), State Secretary for Finance Wiebes speaks of ambition, but at the same time he says that there is currently no financial headroom for these ambitions. In addition, no timetable is set for tax reforms. Some of the ambitions of Wiebes, like fewer expenses for working and doing business and improving the business climate in the Netherlands, are also items on our wish list. The same goes for shifting the tax burden from working and doing business to consumption, and simplifying complex regulations. We would like to see a gradual increase in tax on consumption through the phased introduction of a single VAT rate, in exchange for a reduction of the tax burden on working and doing business. A simpler tax system thus calls for reform of the taxation of businesses as regards income tax and corporate income tax. We advocate research into such issues as the benefit of corporate income tax in the total tax mix and a (more) neutral treatment of equity and debt capital. As you can see, there are still quite a few items on our wish list, and we will keep promoting these in our discussions with interest groups, politicians, directors and media. Budget Day still is an important day for determining your tax situation. Hence we will outline the key tax measures of the 2015 Tax Plan for you. The focus is on what these proposals mean for you and what action you can take. Icons will indicate the impact of the individual measures for you. During the parliamentary debate over the coming months, we will update you on all amendment proposals (via the site keep up to date ). Amsterdam, 16 September 2014 Sytso Boonstra Chairman of PricewaterhouseCoopers Belastingadviseurs N.V. Budget Day Dutch Tax Package 2

3 Foreword Employer and Business Pensions Employer and Adjustments to the work-related costs scheme Action: Prepare for the (final) implementation of the work-related costs scheme From 1 January 2015 the so-called workrelated costs scheme will be mandatory for all employers. The Tax Plan 2015 does not include a (further) extension of the period that the transitional rules apply, but does include some changes regarding the workrelated costs scheme itself. These changes are in line with the explanatory letter from the Ministry of Finance dated 3 July We advise that you ensure you are ready for implementation of these mandatory rules by 1 January 2015, including the following changes: The general exemption will be 1.2 per cent of the total salary for wage tax purposes (2014: 1.5 per cent); The necessity requirement will apply for equipment, computers, mobile communication devices and similar devices. If you as employer think that in all reason these facilities are necessary for your conduct of business, then this facility will be tax free, under additional conditions. After the end of each calendar year, the excess over the general exemption can be determined in a one-off review. Any tax due is payable at the same time as the wage tax return for the first period of the next calendar year. A specific exemption will be introduced for a discount on companies own products, which is very similar to the former regulation for companies own products. A group policy will be introduced, under which companies within a group are allowed to create one collective general exemption. You as the employer may choose whether or not to use this option. This rule then applies to all group companies that meet the direct or indirect ownership rules of at least 95 per cent participation during the (full) calendar year. A specific exemption will be introduced for some workplace-related facilities. A zerorating is already currently possible for these facilities. The fiscal distinction between all allowances and payments-in-kind will be removed for these workplace-related facilities. Amendment to the customary salary scheme Action: Determine the new amount of the customary salary If you work for a company in which you (or your partner) hold a substantial interest, you qualify as a director/substantial shareholder (DGA). Hence, the so-called customary salary scheme applies. On 1 January 2015 a number of amendments will be applied to this scheme. One of the most important amendments is that going forward the wage of the DGA must be tested against the wage of the with the most comparable paid employment, instead of a similar paid employment (the current rule). Furthermore, the efficiency margin will be reduced to 25 per cent (currently 30 per cent). To determine the customary salary, the highest wage of the other ( regular ) s must also be taken into consideration. The group of s whose wage must be taken into account will be extended. The extension is especially important for partners within a partnership (e.g. tax consultants, lawyers, doctors, architects). For 2015, transitional rules are applicable. Budget Day Dutch Tax Package 3

4 Foreword Employer and Business Pensions Business Foundations and associations with several enterprises Action: No action needed If your foundation or association operates several enterprises, these will now be deemed to be a single enterprise for tax purposes. This means, among other things, that the results of the individual enterprises will be offset against each other. As from 2016, this policy will be codified in law. 1 January 2016 no end date Interest on dividend withholding tax Action: Pay your dividend withholding tax on time to avoid interest payments Late payments of dividend withholding tax are no longer interest-free. On the other hand the same goes for late repayments of dividend withholding tax by the tax authorities. The rules apply from 1 January 2015 and may have a retroactive effect for prior years. Budget Day Dutch Tax Package 4

5 Foreword Employer and Business Pensions Pensions Tax-efficient access to life course savings again possible Action: Decide if this is an attractive option for you During 2012, life course savings arrangements were closed. In 2013, participants had the temporary opportunity to cash in savings up to 31 December 2011, with 20 per cent of this coming tax-free. In 2015 this facility is reintroduced for remaining savings up to 31 December January December 2015 Introduction of net pensions and net annuities Action: Decide if the net savings provision is your preferred option for providing benefits to your s From 1 January 2015, the opportunity for your s to accrue tax-favorable pensions is reduced: the maximum pension accrual rates are decreased and your s cannot build up tax-favourable pensions on income exceeding EUR 100,000. An alternative for your high earners is the new voluntary net savings provision - either a net pension product or a net annuity product. The contributions are not tax-deductible but distributions are tax-exempted. For both net pensions and net annuities, a wealth tax exemption applies, provided that all conditions are met. The maximum net contributions are age-dependent. Net pensions can be administered by pension funds and insurance companies; net annuities by insurance companies and banks. Annuity cash conversion for people with long-term disabilities Action: If you are disabled, you can check if you meet the conditions to convert your annuity to an immediately available cash lump sum From 1 January 2015, people with a longterm disability will have the opportunity to wholly or partly commute their annuity savings without any penalty interest due. Therefore your annuity capital can serve not only as retirement income, but can also be used to provide immediate income during disability. There are some conditions set to this annuity commutation facility, though. For example, there is a maximum permitted commutation amount per calendar year. Payroll taxes will be withheld on the commutation amount in the usual way. The annuity commutation facility will also be applicable for the net annuity product introduced on 1 January Budget Day Dutch Tax Package 5

6 Foreword Employer and Business Pensions Mortgage interest deduction - principal residence Mortgage interest deduction for remaining debts Action: No action required As a home owner, you may benefit from a mortgage interest deduction for your principal residence, but also for another dwelling. This for instance applies in relation to a former principal residence that is still up for sale, but also to new property that is purchased and will become the principal residence on short notice. From 2015, the mortgage interest is deductible for a maximum period of three years in both situations. A mortgage interest deduction also remains available for a former principal residence that was temporarily rented out and, afterwards, put up for sale again. In this case, however, the mortgage interest deduction is only available during the period that the property is not rented out. Action: No action required When you sell your house, it is possible that you are faced with a remaining mortgage debt (if the sale price is less than your mortgage debt). From 1 January 2015, the maximum period during which the mortgage interest paid on qualifying remaining debts is tax deductible will be extended from 10 to 15 years. For completeness sake we note that this measure was announced in the explanatory notes, but is not yet included in the actual proposed legislation. 1 januari 2015 no end date Budget Day Dutch Tax Package 6

7 Foreword Employer and Business Pensions Interest on refunds of tax under EU law Action: Ask for an interest payment whenever you receive a tax refund. If you get a tax refund under EU law then you are entitled to an interest payment. You have to submit a request within six weeks of the refund. For old cases you can submit a request until six weeks after 1 January However, you can already ask for your interest payments now. At present, the right to an interest payment is based on case law. Budget Day Dutch Tax Package 7

8 Foreword Employer and Business Pensions Contact details Should you have any questions regarding this publication, please contact your PwC tax advisor or the Knowledge Centre Tax & HRS. Knowledge Centre Tax & HRS Telephone: +31 (0) At PwC in the Netherlands, over 4,300 people work together from 12 offices. PwC Netherlands helps organisations and individuals create the value they re looking for. We re a member of the PwC network of firms in 157 countries with more than 184,000 people. We re committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at This content is for general information purposes only, does not constitute professional advice and should therefore not be used as a substitute for consultation with professional advisors. PricewaterhouseCoopers Belastingadviseurs N.V. does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it PricewaterhouseCoopers Belastingadviseurs N.V. (KvK ). All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details. Budget Day Dutch Tax Package 8