What does Budget Day 2022 mean for your business?
Higher corporate tax, an increase in minimum wages and a higher tax-free kilometre allowance are just some of the plans the government has announced for the coming tax year. You can find details of some of the proposed changes below.
From 2023 businesses will be paying more corporate tax. Both because of a reduction in the amount of profits eligible for the standard rate of tax and because of an increase in the corporate tax rate. From 2023, the standard corporate tax rate will apply to profits of up to €200,000 (previously: €395,000). This means more profits falling into the second tax band, where a higher rate applies. The government also plans to increase the standard rate from 15% to 19%. This means higher taxes on profits in the first band. The rate in the second band, however, will stay the same.
The Act on Excessive Borrowing from One’s Own Company comes into force next year. Under this legislation, borrowings above €700,000 by directors/major shareholders (and any partners they may have) from their own company will be liable for a notional levy. And this will mean income tax being payable in box 2 at 26.9%.
The 30% ruling is available to employees from outside the Netherlands who come to work here temporarily. Providing they meet the conditions, these employees can receive up to 30% of their salary tax-free. The amount they can receive tax-free under these arrangements is capped at an annual maximum of 30% of the amount set in the Executives’ Pay Standards Act. Instead of applying this 30% ruling, employers can continue choosing to refund extraterritorial costs declared as expenses. It has been proposed that, each calendar year, a choice should be made between reimbursing expenses declared and payment under the 30% ruling.
Box 2 rate to remain the same
Shareholders with a stake of 5% of more in a private limited company are seen as having a substantial shareholding. Income from such shareholdings will continue to be taxed in box 2 at the existing rate of 26.9%.
From 2024, however, there will be two tax bands in box 2: income of up to €67,000 will be taxed at 24.5%, while any income above that amount will be taxed at 31%.
Property transfer tax on business premises
The tax payable on transfers of business premises and investment properties will rise from 8% to 10.4% next year. The rate payable will be determined by the date when the notary executes the transfer deed. Transfers in January 2023 will be liable for the higher 10.4% rate, while the 8% rate will apply to those completed in 2022.
Change in tax arrangements for employee share options
Employees receiving share options instead of salary are taxed on these options. From next year, they can choose when to be taxed: either, for example, when their options become tradable or when they convert them into shares.
Transport and expense allowances
The tax-free kilometre allowance will increase to 21 cents per kilometre next year. Businesses can deduct these amounts from their profits for business travel made using a private car, motorbike or bicycle. If you’re an employer, this is the amount you can refund to your employees tax-free. From 2024, this tax-free allowance will rise to 22 cents per kilometre. The reduction in fuel tax duties introduced earlier this year will continue to apply in the first half of 2023.
The discount on the addition to taxable income for private use of a zero-emissions company car is going to be phased out. The 6% discount will continue to apply in 2023 and so the amount added to taxable income will remain 16%. But the maximum catalogue price to which the discount on the addition to taxable income applies will be reduced from €35,000 in 2022 to €30,000 in 2023.
Proposals to be finalized by 1 January 2023
Parliament will debate the government’s plans over the coming week. This will involve the leaders of the various parliamentary parties discussing the Budget Memorandum and central government budget to see whether the plans can be implemented. So the government can still change the plans. By 1 January 2023, however, both the House of Representatives and the Senate have to have approved the plans and the budget.
To stay up-to-date with developments, follow us on this page over the coming weeks. We’ll be posting regular updates. To find out what the Budget Memorandum means for your specific situation, feel free to contact Accountor. We’ll be happy to help you.