Key tax tips for business and trade

Dividend payments: reduction of highest box 2 rate

For personal income tax purposes, the highest box 2 tax rate will be reduced from 33% to 31% as of 2025. This rate applies to incomes of 67,000 euros or more in box 2 (134,000 euros for tax partners combined). The lower box 2 tax rate of 24.5% (for incomes in box 2 up to 67,000/134,000 euros) remains the same as in 2024. If you are considering paying dividends from your own company, it is important to take this tax rate change into account. Keep in mind that dividend payments from 2025 may also affect the amount of your general tax credit.

Charitable donations from own company

As of 2025, charitable donations from a company that do not serve any corporate interest will be regarded as a dividend distribution to the company's shareholder(s). This dividend distribution will be subject to taxation in box 2 of the personal income tax. It is therefore advisable to make any charitable donations from your company as late as 2024.

The gift deduction in the corporate income tax will not expire in 2025. The corporate income tax gift deduction is limited to 50 per cent of the profit, with a maximum of 100,000 euros.

Application of small-scale investment deduction

When determining a company's profits, an additional deduction may be claimed for certain investments. This is the small-scale investment deduction (‘KIA’). In 2024, the KIA cannot be applied if the total investment amount of 387,580 euros is exceeded.  You can consider postponing the investment until 2025 to use the KIA.

Timely reinvestment in case of reinvestment reserve

Under conditions, the book profit of an asset may be carried forward to a reinvestment. If a reinvestment reserve was formed within your company in 2021, it is important to make a new investment (that meets the conditions) by the end of 2024 at the latest (to use the formed reinvestment reserve in time). Otherwise, the reinvestment reserve will be released taxed, unless the nature of the asset requires a longer period, or the acquisition has been delayed due to special circumstances.

Re-evaluate a fiscal unity

In 2025, the corporate tax rate is 19% on the first 200,000 euros of profit and 25.8% on the excess. By re-evaluating a fiscal unity (for corporate income tax purposes) or demerging an existing company, you can optimize your tax position if the combined level of profits exceeds 200,000 euros. Consider carefully whether terminating the fiscal unity or demerging a company is possible without triggering corporate income taxation. Individual circumstances will determine this. If you want to exclude a company from an existing fiscal unity as of 1 January 2025, you should submit a request to the Dutch Tax Authorities by 31 December 2024.

Document of loan agreements with your BV

Ensure that all loans with your BV (loans and current account) are documented in writing. This applies to all agreements you have with your BV or agreements between your BVs.

VAT deduction adjustment for (partly) VAT-exempt entrepreneurs  

Annually, the pro rata percentage must be determined if both VAT-exempt and VAT-taxed services are performed. If this percentage differs from the originally deducted input VAT percentage, a year-end correction must be made. In addition, an assessment must be made whether a revision of input VAT on investment goods is necessary.   

Should the pro rata percentage be lower than 90%, this may also have consequences if the choice was made for a VAT-taxed rental of one or more properties.  

Submitting a supplementary VAT return 

If you reported too much or too little VAT in the past financial year or the five previous financial years, you are obliged to correct this via a supplementary VAT return if the correction amount exceeds 1,000 euros per VAT period. If the correction amount is lower than this threshold amount, you can include the correction in the next VAT return; you will then no longer receive an additional VAT assessment on the corrected amount.

Bad debts and VAT 

The year-end is an appropriate time to have insight of outstanding receivables for (potential) bad debts. VAT on uncollectible receivables can be reclaimed via the VAT return as soon as it is certain that all or part of the receivables will no longer be paid. In any case, receivables are deemed uncollectible for VAT purposes after the expiry of one year from the final payment date of the relevant receivable. It is important to actively monitor this period so that VAT can be reclaimed in a timely manner. Note that it is important to correct the VAT payment at the right time, as this may be refused by the Dutch Tax Authorities at a later stage. This means that a refund should be requested in the same period in which the unrecoverability was established.

Assessing turnover for small entrepreneur scheme 

VAT entrepreneurs who achieve a turnover of up to 20,000 euros in a calendar year can make use of the small entrepreneurs' scheme (‘kleindondernemersregeling’ or ‘KOR’). If a VAT entrepreneur wants to apply the KOR, notification must be submitted to the Dutch Tax Authorities at least four weeks before the start of a VAT period (usually a month or a quarter). From 1 January 2025, the KOR will change in the following respects:

• the mandatory three-year participation period will be abolished so that a VAT entrepreneur can deregister of the KOR at any time;
• after deregistering of the KOR, an exclusion period will be applicable for the calendar year in which the entrepreneur deregisters from the KOR and the following calendar year, instead of three calendar years; and
• participation in the KOR for foreign entrepreneurs ends.

In addition, the European KOR will enter into force and from 1 January 2025, KOR entrepreneurs can apply the KOR in other EU member states.

Reclaiming foreign VAT (EU and United Kingdom)   

When foreign VAT is charged, the VAT cannot be reclaimed in the Dutch VAT return. Instead, a VAT refund request to reclaim the EU VAT can be submitted under conditions to the Dutch Tax Authorities. Consideration may be given to the application of goodwill interest (‘coulancerente’) if it has taken longer than 15 days for the refund request to be forwarded by the Dutch Tax Authorities to the country of refund. 

Incidentally, since Brexit, a different deadline and procedure applies for reclaiming VAT from the United Kingdom. The period over which VAT can be reclaimed runs from 1 July 2023 to 30 June 2024 and the refund request must be submitted to the UK Tax Authorities. It is therefore not possible to submit this refund request through the Dutch Tax Authorities. VAT from this period can be reclaimed no later than 31 December 2024.  

Open limited partnership tax transparent

An open limited partnership (‘open commanditaire vennootschap’ or ‘open CV’) is regarded as non-transparent for Dutch tax purposes. With effect from 1 January 2025 this will change. Accordingly, all limited partnerships will be regarded as tax transparent, meaning that the assets and liabilities and income and expenses of a limited partnership will be directly allocated to the partners in proportion to each one's entitlement. As result, the corporate income liability of open limited partnerships will be abolished. This could lead to personal income taxation for limited partners and corporate income taxation for the open limited partnership in 2024. Transitional law is available to carry forward these tax claims, but this requires that conditions are met, and action is taken in 2024 where appropriate. 

Open common account fund - tax transparent

An open common account fund (‘open fonds voor gemene rekening’ or ‘open fgr’) is regarded as non-transparent for Dutch tax purposes. With effect from 1 January 2025 common account funds can only be qualifying as non-transparent and liable to Dutch corporate income tax if it qualifies as an investment fund or institution for collective investment in transferable securities (‘UCITS’) as referred to in the ‘Wet op het financieel toezicht’. Most family funds will not (be able to) meet this new requirement. As result, the Dutch corporate income tax liability of an open common account fund could be ended by the end of 2024. This could lead to personal income taxation for individual participants and corporate income taxation for the open common account fund in 2024. Transitional law is available to carry forward these tax claims, but this requires that conditions are met, and action is taken in 2024 where appropriate.

Abolishment of exempt investment institution regime

With effect from 1 January 2025, the exempt investment institution (‘vrijgestelde beleggingsinstelling’ or ‘vbi’) regime will be abolished for the vbi's of wealthy individuals and families. Due to a change in legislation, only an investment fund or institution for collective investment in transferable securities (‘UCITS’) as referred to in the ‘Wet op het financieel toezicht’ can qualify for the ‘vbi’ regime.

The ‘vbi’ status will be lost with effect from 1 January 2025 (also for broken financial years). As a result, a ‘vbi’ will in principle become liable to Dutch corporate income tax again. From 1 January 2025, the entity must prepare an opening balance sheet on which the assets are valued at fair value.

CbCR report or notification to Dutch Tax Authorities

Based on mandatory transfer pricing documentation obligations, Country-by-Country Reporting obligations apply since 2016 for groups with consolidated turnover of at least 750 million euros. If the parent company is based in The Netherlands, it must (in principle) submit a Country-by-Country Report (‘CbCR’) to the Dutch Tax Authorities within 12 months of the end of the group's financial year. If the CbCR report is filed by a foreign group company with a foreign tax authority, the Dutch group company must submit a notification to the Dutch Tax Authorities. The notification shows which group company will file the CbCR report in which country. This notification must be made to the Dutch Tax Authorities within 12 months after the end of the financial year (often no later than 31 December of the year).

Public Country-by-Country Reporting 

Due to new legislation, companies with a global consolidated turnover of at least 750 million euros are required to publish a statement showing the profit taxes paid per EU country. This Public Country-by-Country Reporting is based on an EU directive. This obligation starts for the financial year beginning on or after 22 June 2024.  Therefore, if the financial year is equal to the calendar year, 2025 will be the first reporting year.

Exchange of information digital platform economy (DAC7) 

The European DAC7 directive deals with the automatic information exchange for digital platform operators. From 1 January 2023, European digital platforms are obliged to collect and record data on sellers using the platforms. From 2024, digital platforms are obliged, for the first time, to report the data to tax authorities. National tax authorities will then automatically exchange this data with other EU member states. The sales covered by DAC7 are sales of goods, rental of real estate, provision of personal services and rental of means of transport. However, platforms have a threshold for the reporting requirement: they only report on sellers who make 30 or more sales in a calendar year for a total amount exceeding 2,000 euros. 

The required reporting data must be collected and verified by 31 December of the calendar year to which the data relates. The deadline for reporting the data to the tax authorities is a following month. Thus, it is necessary to make sure that you meet your DAC7 obligations before the end of the calendar year.

Preparing for CBAM  

With Carbon Border Adjustment Mechanism (‘CBAM’), the EU aims to create level playing field between tax producers outside the EU and within EU regarding carbon emissions made during the production of certain goods imported into the EU (so-called embedded emissions). From 1 October 2023, companies must collect data on embedded emissions from their imported goods  and submit quarterly CBAM reports. From 1 January 2026, the CBAM will actually take effect requiring mandatory annual CBAM declaration. To submit quarterly CBAM reports and in preparation for the mandatory annual CBAM declaration from 2026, it is very important to determine your company's role in the supply chain and the exact composition of your products.

Want to know more about the above year-end tips?

Would you like to know more about a subject from these year-end tips? Your Forvis Mazars tax advisor is more than happy to assist you further.