Fiscal benefits partnership tax
When you are paying partnership tax in the Netherlands, you may be entitled to deductibles and tax credits. This can always give you some interesting fiscal benefits. To make sure you can maximise your tax benefit, we will list the fiscal benefits in the partnership tax in this article.
Paying partnership tax
anonymous and private companies pay taxes over profit and will need to declare for their partnership taxes. Other legal entities, such as associations and foundations, only need to declare partnership tax in certain situations*. Natural persons (such as the sole proprietorship, but also the general partnership (VOF) or partnership do not pay partnership taxes. They are obligated to pay income tax.
Rates partnership tax
The low partnership tax bracket rate in 2021 is 15%
The high partnership tax bracket rate in 2021 and 2022 is 25%
The difference between the low and high bracket in 2021 is €245.000,-
This bracket boundary is increased in 2022 to €395.000,-.
Expenses that are necessary, within reason, for the execution of your entrepreneurial activities and expenses that directly affect your enterprise. See the overview of (possible) deductible business expenses here*.
All business expenses are deductible with your tax declaration. This includes the expenses you have made before the starting date of your company. When you deduct the VAT of your purchases as pre tax with your declaration revenue tax, you have to deduct the expenses for your declaration partnership tax without the VAT. Did you not have to do a VAT-declaration? Then you can include the expenses with the VAT with your partnership tax declaration. You are obligated to register the invoices of your business expenses in your administration.
The amount you can deduct is dependent on what business expenses you have made. When declaring your taxes, you include all your purchases that are cheaper than €450,-. More expensive purchases that are used for more than a year (computers, machines, company cars, inventory, etc.) will need to be written off. The purchase amount is divided by the number of years that the purchase is used for business purposes. When the purchase has a remaining value after this period, than that amount is not deductible and will need to be deducted from the total amount. The formula that you use for this is as follows: Purchase amount - remaining value: term = amount annual deduction.
The Tax Authorities applies the following example to demonstrate the formula:
Purchase: professional camera
Usage period: 5 years
Remaining value: €1.500
Annual deduction: (€6.000 - €1.500) : 5 = €900
Company assets in which you, as an entrepreneur, invest in, are sometimes partially deductible from your profit. This fiscal benefit has a number of conditions, but can come to a significant amount. The investment deduction consists of three parts: the small-scale investment tax deduction (KIA)*, The energy-investment deduction (EIA)*and the environment-investment deduction. (MIA)*
Fiscal compensation for investment of small and medium sized entrepreneurs.
To be entitled to the KIA you will have to invest between 2.401 and €328.721 in company assets.
In 2021 you are entitled to a deduction of 28% of the investment amount with an investment amount between €2.401 and €59.170.
With an investment between €59.170 and €109.574, you can deduct a maximum amount of €16.569 and from everything above this amount (up to the aforementioned €328.721) you can deduct €16.568 minus 7,56% of the investment amount above €109.574
Pay attention: the deductible percentages/amounts can differ per year. Check the most actual information here*.
The EIA is a compensation that you could be entitled to when you invest in an energy-efficient technique or in renewable energy.
To be entitled to the EIA, you can invest in energy-efficient techniques or in renewable energy. Check whether the desired company assets are included in the Energy list*. Is this the case? Register the investment prior to the purchase on mijn.rvo.nl
The EIA is 45,5% in 2021, the minimum investment amount is €2.500 per company asset. The total maximum investment amount is €126.000.000.
Pay attention: investments can be eligible for both the energy investment deduction and the small-scale investment tax deduction simultaneously. A combination of the energy investment deduction and the small-scale investment tax deduction (see below) is not possible.
The MIA is a compensation for investment in environmentally friendly company assets or techniques.
You can apply for the MIA by checking if the company asset you want to invest in, is part of the environment list*. If so, you will have to report your investment with the RVO. The deduction can then be included with your tax assessment.
The environment-investment deduction is dependent on the category of the investment. The deduction percentage is indicated with a company asset code, by means of a letter in the environment list.
When the investment is part of category I, you can deduct 36% of the purchase value. For category II a percentage of 27% applies and lastly for category III you can deduct 13,5%.
Pay attention: the minimum investment amount is €2.500 per company asset and you cannot be eligible to deduct more than €25 million in investments.
Investments can be eligible for both the environment-investment deduction and the small-scale investment deduction. The MIA regulation is often combined with the VAMIL (see below).
Are you making use of the MIA? Then, the VAMIL-regulation for you environmental investment might be interesting for you as well:
Vamil is a randomized deduction for environmental investments. This is a regulation with which you are compensated for investments in environmentally friendly company assets.
You pay less taxes by deducting the expenses for purchasing or adjusting environmentally friendly company assets that are included in the environment list in a random year with a random percentage. Through the VAMIL, you can choose to write off a company asset, that normally has a ten year write-off period, in one year. You have to report the investment within three months of purchase with the RVO and then apply the VAMIL in your tax declaration.
The deductible amount is dependent on the amount of the write-off. The deductible amount is increased by not spreading out the write-off period deduction. Pay attention though: with the VAMIL, you ultimately do not pay less taxes, but you do have more freedom of choice when you pay off what percentage of taxes for the purchase.
Research and development work (WBSO)
A regulation to make innovation more appealing for entrepreneurs. With the WBSO you can deduct expenses from the partnership tax for the development part for innovative activities
The enterprise invests at least 500 hours in ‘research and development work’, and the activities must contribute to innovation. When this is the case, you can request a statement at the RVO before you have done the work that is eligible for the WBSO.
By deducting the research and development work you can be entitled to a deduction with the amount of € 13.188,- (2021).
The innovation box is created by the government to stimulate innovative research by entrepreneurs. The box is basically the next step on the abovementioned WBSO: the WBSO is a compensation for development, the innovation box can be applied when the innovation generates profit that is taxed in the partnership tax.
The innovation box is a lowered tax percentage over the profit that is generated by innovative activities. You can, therefore, get a tax deduction for innovation. When you choose for the innovation box, then you can request that in your declaration partnership tax over the first year in which you want to apply this regulation for.
In 2021 the rate for the partnership profit tax for innovative activities is 9%. Losses on innovation are deductible at the usual rate.
Advise this brochure from the RVO*, for more information on the innovation box.
An arrangement that makes it more appealing for companies to make donations
you can deduct donations that your company has made to ANBI’s and/or charities, SBBI’s with your declaration partnership tax. You will have to demonstrate that you have made deductible donations by administering the donation with written proof.
The maximum deduction is a maximum of 50% of the profit, annually. You will have to have proof of these donations in writing. When the enterprise makes a donation to an ANBI that has been designated as a cultural institution, then you can (up to a maximum of €2.500-) increase the deduction from the profit by 50%.
Fiscal unit partnership tax
Do you have several enterprises in the partnership tax? By designating a parent company in combination with one or more subsidiaries as a fiscal unit for the partnership tax, you can do just one declaration for all enterprises combined. This way you can get some fiscal benefits by adding the results of the subsidiaries to the parent company.
By deducting the (negative) result of one of your enterprises with the (positive) result of others, you can lower the partnership tax you need to pay to the Tax Authorities.With this ‘horizontal loss compensation’ you can shift your assets.
The benefit that forming a fiscal unit can generate, is dependent on the results and divide of the corporations. Pay attention: forming a fiscal unit can also be disadvantageous. Read this article to consider whether a fiscal unit will benefit you in the partnership tax.
Conditions, deductibles, deductible percentages and exemptions with fiscal regulations are continuously in motion and therefore, subject to change. Make sure to always check the Tax Authorities’ website, the RVO or the information your tax consultant or advisor gives you, so you remain up to date. This way you ensure that you make use of the fiscal benefits in a smart and legal manner that applies to your unique situation.
On this webpage of the Tax Authorities*, you can read more about the various rules and aspects of the partnership tax. Would you like to learn more about the other fiscal benefits? Lexlupa already wrote about the fiscal benefits for the income tax and for private individuals. Click here for an article about the benefits and disadvantages for forming a fiscal unit for the partnership tax. Or contact us for any further questions. We are more than happy to help!