Budget Day 2021: SME companies

Adjustment of corporate income tax bracket

The following tax rates (and brackets) are proposed to be amended:

As of January 1, 2022 the width of the first tax bracket will be broadened from €245,000 to €395,000. This should result in a corporate tax rate of 15% on the first €395,000 in profit and a tax rate of 25% for the remainder of the profit. Furthermore, there are no indications that the tax rates and/or threshold will be amended after 2022 at this moment.

Adjustment of loss compensation rules as of January 1, 2022

The Dutch Ministry of Finance announced in the previous tax package that there will be a separate proposal to adjust the current loss compensation rules. The proposal introduces an unlimited period for losses to be carried forward as of 1 January 2022 (currently limited to six years). The proposal does not entail an adjustment of the current carry back period of losses, which is one year. However, all losses (both carry forward and carry back) can only be settled up to €1 million of taxable profits. When the taxable profit of an entity exceeds €1 million, the losses can only be settled in that year up to an amount of €1 million, plus 50% of the taxable profit above €1 million. The proposal has been converted into legislation in May 2021 and will enter into force on 1 January 2022.

Limitation on settlement of dividend tax and gambling tax (Sofina case)

This proposal discusses the limitation of the settlement of dividend tax and gambling tax with corporate income tax. The proposal stems from a ruling ("Sofina case") of the European Court of Justice. The settlement of dividend tax and gambling tax will be limited to the amount of corporate income tax due in that year. Under certain conditions, any unsettled withholding taxes can be carried forward to later years. This proposal will also have an impact in the event of forming or disbanding a Dutch fiscal unity and in the event of mergers and demergers. The proposal will enter into force on January 1, 2022.

Bill on delegation provisions for distressing cases

The purpose of the measure is to provide a legal basis for nullifying or mitigating the distressing consequences of an unjustified act or omission on the part of the Tax and Customs administration, as a result of which groups of interested parties are affected. The proposed delegation provision is general in nature. Depending on the circumstances, an Order in Council may determine which interested parties are eligible for a concession, its form and the conditions under which the concession is granted. The concession can be offered in the area of the levy (inspector) as well as in the area of the collection (receiver). The measure does not affect already existing possibilities to obtain reimbursement or compensation from the Tax Authorities, but cannot lead to a double concession.

Increase in percentages of the Environmental Investment deduction (MIA)

It is proposed to increase the percentages for the Environmental Investment deduction (MIA) as of January 1, 2022. This will further encourage companies to make environmentally friendly investments and may turn a non-profitable investment into a profitable one. Under certain conditions, companies may deduct a percentage of the investment costs from their taxable profit so that less income and/or corporation tax is owed. The current three percentages are: 13.5%, 27% and 36%. As of January 1, 2022, these will be increased to: 27%, 36% and 45%. On the Environmental List is indicated which percentage applies to each asset. The Environmental List is updated at the end of each year by the RVO.

Reduction of income-dependent combination tax credit (IACK)

It is proposed to reduce the maximum amount of the IACK as of 2022 by € 395. In addition to the reduction proposed as of January 1, 2022 pursuant to the Tax Plan 2021, the maximum amount of the IACK will be increased by € 77 as of January 1, 2022. On balance, for 2022 there is a policy-based reduction of the maximum amount of the IACK of € 318. This measure serves to partially cover the expenditures resulting from the Paid Parental Leave Act bill that was passed by the House of Representatives on April 20, 2021.

Repair of income-related combination tax credit (IACK) granted to foreign taxpayers

The application of the income-dependent combination tax credit (IACK) is conditional on, among other things, the taxpayer not having a tax partner, or having a tax partner with a higher employment income. 

The granting of the IACK to foreign taxpayers can lead to different outcomes compared to domestic taxpayers with similar factual circumstances. The difference between foreign and domestic taxpayers is an unintended effect of the legislation and is caused by the exception to the tax partner concept for foreign taxpayers. 

In the Tax Plan 2022, it is proposed to amend the legislation on this point as of January 1, 2022, whereby the effect of the IACK for foreign taxpayers will be made equal to that of domestic taxpayers.

Want to know more?

Would you like to know more about the Tax Plan 2022, the proposed changes and what this means for you? Then please contact Pieter Tra by e-mail of by phone: +31 (0)88 277 18 85. He is happy to help you.