Budget Day 2022: SME companies

Box 2 (substantial interest) rate increase - 2 tax brackets from 2024

Significant stakeholders are shareholders of a private limited company (BV) with an interest of at least 5%. The regime of box 2 applies here. The rate is currently 26.9% and there are no tax brackets. Income from substantial interest, like dividend withdrawals from the BV or sale of shares, will be taxed differently from 2024 onwards.

If the tax plan is adopted, there will be two tax brackets as of 2024. The first bracket runs up to €67,000, for which a rate of 24.5% will apply. The second bracket is the amount above € 67,000 and this will be subject to a rate of 31% if the tax plan is adopted without changes.

If a significant interest holder wishes to make substantial dividend distributions, or sell his shares, it is good to consider whether this income can still be realized in 2023.

Proposal to abolish efficiency margin salary director-major shareholder (DGA)

The efficiency margin is the percentage by which a DGA is allowed to reduce his or her salary compared to the salary of someone with the most comparable employment. If the tax plan is adopted, the efficiency margin will be abolished from 1 January 2023. A larger part of the DGA's income will then be taxed as salary.

Proposal to increase corporate tax rates and reduce first rate bracket

The proposal is to reduce the limit for the low corporate tax rate from €395,000 to €200,000. The low rate will be increased from the current rate of 15% to 19%. The high rate of 25% will increase to 25.8%. Profits above €200,000 will be taxed at 25.8% from 1 January 2023 if the tax plan is adopted as it stands.

It may be considered to disband the fiscal unity for corporate income tax this year in order to benefit from the first rate bracket per company. This is tailor-made advice as breaking up the fiscal unity may have adverse effects on balance, depending on the situation. Therefore, contact your adviser.

Proposal to end accrual of old-age reserve for entrepreneurs in box 1

The proposal is that from 1 January 2023, entrepreneurs in box 1 (usually self-employed professionals) will no longer be allowed to add their profits to their fiscal old-age reserve (FOR). This means that from 1 January 2023, the old-age reserve can therefore no longer be built up further.

The current retirement reserve built up until 31 December 2022 may remain. At the moment the entrepreneur has reached the state pension age or ceases the business, the retirement reserve built up to the end of 2022 will be settled on the basis of the rules that apply on 31 December  2022.

Entrepreneurs in box 1 should consider this year whether they can build up a pension that is deductible in box 1 in a different way from the year 2023 as compensation for the abolition of allocations to the old-age reserve. 

Proposal of accelerated phase-out of self-employed deduction for entrepreneurs

It had previously been the case that the self-employed deduction would be phased out. The Tax Plan 2023 has now proposed an accelerated phase-out of the self-employed deduction from 1 January 2023 to €1,200 in 2026 (previously 2030) and a further reduction to €900 in 2027.

Policy decision codified for converting old-age obligation into annuity

It has been proposed that taxpayers will have wider options to convert the self-administered retirement obligation at the company into an annuity. The intention is that the old-age pension commitment can also be converted into an annuity five years after the taxpayer reaches the state pension age. It is the intention that this will become possible with retroactivity to 1 January 2017.

This may be desirable, for example, if the company in which the retirement obligation is held is liquidated.

Real estate outside fbi regime

The profits of a fiscal investment institution (fbi) are taxed at 0% rate. It has been proposed to introduce a measure from 1 January 2024 whereby fbi's will no longer be allowed to invest directly in real estate.

Want to know more?

Would you like to know more about the Tax Plan 2023, the proposed changes and what this means for you? Then please contact Pieter Tra by e-mail or phone +31 (0)88 277 18 85. He will be happy to help you.