Well prepared for 2015 - PwC€¦ · ‘Well prepared for 2015 – Tax tips for private clients and businesses’, PwC’s advisors outline the most important tax tips and points

Well prepared for 2015 Tax tips for private clients and businesses

www.pwc.nl

October 2014

2 Well prepared for 2015 | Tax tips for private clients and businesses

Contents

Private clients 4

Business 5

Transfer pricing in your company 6

Director/substantial shareholder 8

Self-administered pension 9

Employer and employee 12

Pension for employer and employee 14

Cross-border employment 15

Social security 17

Gifts and inheritances 17

Charities 20

VAT taxable person 21

Real estate 22

Cars 23

Excise duty 24

Levy and collection 24

Well prepared for 2015 | Tax tips for private clients and businesses 3

Foreword

The end of the year is fast approaching. Now is the time to determine your fiscal strategy. In this publication ‘Well prepared for 2015 – Tax tips for private clients and businesses’, PwC’s advisors outline the most important tax tips and points to note, so that you can check whether you need to take action before 1 January 2015. This is valuable information for the people in and behind (family) businesses, as well as private clients and the financial expert(s) within an organisation.

Our tax tips and points to note are based on the current Dutch legislation and case law. We also write in anticipation of the measures proposed in the 2015 Tax Plan, the second memorandum of amendments and other proposed legislation.

Because the House of Representatives and the Senate have not yet approved the 2015 Tax Plan, it remains to be seen which of the proposals will eventually become law. The same is true for other proposed legislation included in this publication. Content based on such legislation is marked with an asterisk (*). Whether the House of Representatives and the Senate accept the 2015 Tax Plan will become clear in mid-December 2014.

This publication is also available at www.pwc.nl/nl/publicaties/goed-voorbereid-op-2015.jhtml.

This is an interactive document; using the table of contents, you can easily click on the links to your chosen topic.

Should you have any questions regarding this publication, please contact your PwC advisor.

Rotterdam, the Netherlands, 23 October 2014

Diederik van Dommelen Partner Tax

http://www.pwc.nl/nl/publicaties/goed-voorbereid-op-2015.jhtml


Private clients

Current developments

Extended exemption for home acquisition giftWould you like to still make use of the extended exemption for a home acquisition gift?Until 31 December 2014 inclusive, regardless of your age or relationship with the giver, under certain conditions you can receive a gift of up to EUR 100,000 free of tax for your own home. If you do so, bear in mind that future mortgage interest relief will be restricted. This is because the home equity reserve will be increased if you, as the recipient, use the gift to redeem home acquisition debt. The extended exemption for the home acquisition gift will cease to apply as of 1 January 2015.

Three-year term for own-home relocation schemes becomes permanent*Is your vacant home still not sold, or are you not yet living in the home you have bought?The temporary measure of a term of three years instead of two for the so-called relocation schemes is to become long-term with effect from 2015. This means, for example, that if your own home has been vacant since 2012 and is destined for sale, in 2015 it will still be regarded as your own home and will thus qualify for mortgage interest relief. If you bought a home in 2012 or it has been under construction since then, you can still receive mortgage interest relief in 2015 provided that you take up occupation of the home as your principal residence in 2015 at the latest.

Existing “stamrecht” may be fully withdrawn in 2014Do you have a “stamrecht” placed with a “stamrecht” bv (private limited company), bank, investment institution or insurer?If so, in 2014 you have the option of, for example, taking out your existing “stamrecht” in its entirety, exempt from 20 per cent revisionary tax. In that case, in principle only 80 per cent of this capital is taxed at the progressive rate in box 1 and 20 per cent remains untaxed. This 20 per cent tax reduction applies only for the year 2014 AND under the condition that the employer transferred the purchase price for financing the “stamrecht” to the (qualified) administrator before 15 November 2013.

Relevant once again

Intention to let your own homeAre you intending to let your own home?If the mortgage loan is regarded as home acquisition debt on 31 December 2014 and you are not going to rent out the home until after 1 January 2015, you can avoid a box 3 levy on the home in 2015. This applies not only to regular rental situations but also to a home being offered for sale that you are renting out on a temporary basis.

Advance payment of mortgage interestAre you expecting a (much) lower income in box 1 in 2015 than in 2014?If so, because relief is at a higher progressive rate, under certain conditions it may be wise to pay your mortgage interest for the first half of 2015 in advance in 2014.

Redemption of home acquisition debtDo you have only a small loan outstanding on your home?If so, in 2015 you can take full advantage of the allowance for little or no outstanding home acquisition debt by paying off this loan in full before 1 January 2015.

Making a giftWould you like to make a gift?If so, consider making the gift before 1 January 2015; a gift reduces your box 3 assets, which can result in a saving of 1.2 per cent deemed yield levy. Do bear in mind that this gift subsequently increases the box 3 assets of the recipient and consequently may result in the recipient being subject to the deemed yield levy, unless he uses the gift for consumer purposes before 1 January 2015. Incidentally, depending on the person to whom you are making a gift, you may give a certain amount per year free of gift tax.

Paying tax debtsDo you still need to pay a tax assessment?It may be wise to pay your outstanding (final) tax assessments this year, the reason being that unpaid tax debts cannot be deducted in box 3, with the exception of gift tax and inheritance tax due.

Use of asterisk (*)We have marked some tips with an asterisk (*). These tips are based on the measures proposed in the 2015 Tax Plan up to and including the second memorandum of amendments. Because the House of Representatives and the Senate have not yet approved the 2015 Tax Plan, it remains to be seen which of the proposals will eventually become law. The content of the tips may therefore be subject to change.


Did you make a written or digital request before 5 November 2014 for a (further) provisional assessment? What if this assessment is not made before 31 December 2014, such that you cannot pay it before the end of 2014?If so, on 1 January 2015 you may, nonetheless, deduct an amount equal to the tax assessment made and paid after 31 December 2014 from the taxed assets in box 3.

Have you, on 31 December 2014, not yet received an assessment for a tax claim submitted before 1 October 2014?In this case you may also, nonetheless, deduct an amount equal to the tax assessment made and paid after 31 December 2014 from the taxed assets in box 3 on 1 January 2015.

Business

Relevant once again

Deconsolidation from fiscal unity on requestAre you planning to deconsolidate one or more companies from an existing fiscal unity as per 1 January 2015?If so, make sure that you submit your request for deconsolidation by 31 December 2014 at the latest.

Deduction of interest related to an acquisitionAre you considering making an acquisition, or is the acquisition already in progress?If so, note that the interest paid on a loan for acquiring another company may not be fully deductible, as various regulations apply to corporate tax that restrict interest deductions. The right structuring and an adequate financing ratio may enable you to avoid interest falling under the deduction restrictions unnecessarily.

Financing participationsDoes a company hold interests qualifying as ‘participations’ and has it incurred debt?If a company holds participations and has debt, interest deduction restrictions might apply. There are various exceptions to this general rule. For example, if there are expansion investments, the interest can indeed be deducted under certain circumstances. If you assess the applicability of the interest deduction restrictions in good time, you will be able to act in anticipation of such. By using the right structuring and an adequate financing ratio, you can avoid the deduction restrictions.

Accelerated loss recognitionDid your company suffer losses in the tax years 2009, 2010 and/or 2011 and are the final assessments yet to be issued?A temporary measure applies in respect of those years: you may elect to extend the period for carrying back losses from one year to three years. However, such election does entail that the period for carrying losses forward is shortened from nine years to six years. You may carry back losses to the immediately preceding year without restriction. As regards the two years prior to that (the extra years), you may carry back a maximum of EUR 10 million per year.

With hindsight, was it wrong for your company not to choose the extended period for carrying back losses?After the final assessment has been issued, in certain cases you may still elect to extend the period for carrying back losses from one year to three years. This is possible if it only becomes clear at a later stage that taxable profit was available for carry-back in a previous year, for example as the result of a court ruling. Do note the submission deadline and supplementary conditions that apply in such case.

Is loss carry-back not possible?In that case, in view of the limited carry-forward period of nine years, you may find it more tax-efficient to prevent incurring tax losses as much as possible and defer them instead. In this respect, you will be required to observe the rules of sound business practice.


Possibility of loss compensationDoes your company have tax losses and will the entitlement to loss compensation expire soon?As a general rule, losses can be carried forward for nine years, after which they can no longer be offset. You may be able to avoid losing the possibility of offsetting losses by taking measures in good time, for example by the realization of hidden reserves.

Reinvestment reserve Did you create a reinvestment reserve in 2011 for the profit made from the sale of a business asset?If so, if you do not make a reinvestment before the end of 2014, in principle the amount of the reserve will be added to the taxable profit. In exceptional circumstances, the period for holding a reinvestment reserve can be extended.

Recapture of the additional investment deductionDid you purchase a business asset less than five years ago and are you planning to sell it?To prevent recapture of the additional investment deduction, it may be advisable to defer the sale of the business asset until the beginning of 2015.

Small-scale investment allowanceAre you planning to make investments in your business this year, or have you already done so?If so, note that the right to investment allowance lapses in its entirety if you exceed the maximum investment amount of EUR 306,931. If it looks as if you might exceed this maximum amount, it may be advisable to postpone investments (in part) until 2015.

Transfer pricing in your company

If your company is active in more than one country, it is subject to rules and regulations relating to transfer pricing (TP). Transactions between group companies (legal entities, as well as, permanent establishments) must be ‘at arm’s length’. The arm’s length principle requires affiliated companies to transact on the same conditions as would have been agreed upon between two unaffiliated parties.


The significance of TPIs TP already on your agenda? If so, please bear in mind that inspection by the Tax Authorities, especially abroad, can be stricter than it used to be in the past. This is due to Tax Authorities exchanging more information more quickly regarding cross-border transactions between affiliated entities. Due to the globalisation of the economy and business, the issue of TP rules and regulations increasingly sparks debate. This has also been prompted by the economic crisis, which has made a ‘fair allocation’ of the tax burden the subject of political and public discussion. That is why TP is now so high on the agenda of the Dutch Tax Authorities that they are training a large number of new employees to take part in transfer pricing audits.

Transparency and consistencyIs your TP policy consistent, and can you be transparent about it? Many initiatives are currently being developed, under the pressure of public opinion, to prevent erosion of the corporate tax base and profit shifting. The most influential initiative is the OECD’s BEPS project. ‘BEPS’ stands for ‘Base Erosion and Profit Shifting.’ As part of this project, reports have been issued which contain recommendations for the proper adoption of TP-principles, with particular emphasis on transparency. Information provided to the Tax Authorities in one country must also be made available to the Tax Authorities in another country. In addition, it is important that legal rules and concepts be interpreted consistently. A financial instrument that is regarded as debt in one country might not be seen as equity in another.


Tax follows the businessIn which country do you have to report your profit?Some claim, that, in recent years, some multinational companies have used TP as a means to avoid paying taxes in certain countries. The enterprises in question are reproached for manipulating the conditions agreed upon regarding their intercompany transactions, and using this as a tool to shift as much profit as possible to jurisdictions with a (more) favourable tax environment. However, if TP rules are applied properly, profit is allocated to those jurisdictions where a company conducts its operations and where the risks and assets of the enterprise are managed: tax must follow the business. If a company deliberately upsets this balance, it is embarking on a slippery slope as regards tax. This is why it is very important to describe and substantiate the economic principles upon which the attribution of profits is based, such as a functional and industry analysis and the TP policies applied, in the TP documentation. In addition to tax information, this could also provide you with interesting management information for your enterprise.

Relevant once again

Arm’s length nature of group loansHave intercompany loans been contracted in your group? If so, bear in mind that, for loans granted between various entities within one group, certain requirements apply that relate to the arm’s length nature of the group loan. This means that independent entities would also be willing to provide a loan under the same conditions. The following aspects are key in determining whether a loan was granted at arm’s length: 1. Terms and conditions: Has security been provided?

Is the loan actually being repaid?2. Amount: Would a third party also have provided a

loan of that amount? 3. Interest: Is the interest rate appropriate to

the loan amount, the loan conditions and the creditworthiness of the debtor?

Arm’s length nature of transactionsDoes your company have one or more entities or branches abroad?If so, please bear in mind that, under international TP agreements, the various entities and branches in the Netherlands and abroad are required to do business with each other at arm’s length. This requirement applies not only to the supply of goods and services but also to the provision of knowledge, brand names and trade mark rights, as well as to group loans. Please note that, if a company does not meet this requirement, this can give rise to questions from the Tax Authorities and may lead to double taxation and tax penalties.

Documentation requirementDoes your company have one or more entities or branches abroad?If so, you must have TP documentation at your disposal. Such documentation - such as a TP report or TP policy - must demonstrate that the prices and conditions between affiliated parties are at arm’s length. If a company does not comply with this documentation requirement, this can result in a reversal of the burden of proof (for example in the Netherlands) and tax adjustments and penalties.

Management feesDo you charge your international affiliates a management fee? If so, bear in mind that such a management fee must meet certain requirements in order to be tax deductible for the recipient of the services. What the applicable requirements are, and how strictly these are implemented, can vary from country to country. In general, the following applies: 1. The management fee must be based on costs actually

incurred and that can be substantiated; 2. Costs that relate to specific shareholders’ activities

are not passed on; 3. The management services supplied must have real

added value for the recipient and 4. The recipient of the services could have purchased

(or have wanted to purchase) these from a third party.

Moreover, from the perspective of the service provider - in so far as a third party could have supplied similar services - a surcharge must be added.


Start-up lossesHave you set up a foreign entity and are you confronted with start-up losses? If so, in principle these start-up losses (or start-up costs) from and for the new foreign enterprise might be deductible in the Netherlands. If the ‘entrepreneur’ of the group resides in the Netherlands and takes the decision to start up abroad, then under the arm’s length principle the costs and risks involved are borne by the entrepreneur. The start-up losses are thus, in principle, deductible from the Dutch taxable profits.

LossesDoes one of your group enterprises consistently report losses? If so, please bear in mind that this can give rise to questions from Tax Authorities. This is because independent entities are unable to continue to exist if they suffer loss on a long-term basis. If such an enterprise does continue to exist and forms part of a group, this may be a signal that the transfer pricing policy applied is not at arm’s length. Because the prices and conditions applied between affiliated enterprises should match the prices and conditions that would have been agreed upon between two independent companies, this could cause Tax Authorities to question whether the conditions in place are at arm’s length.

Director/substantial shareholder


Temporary reduction of box 2 rate to 22 per centAre you intending to distribute dividends in the near future or to sell your substantial interest shares? If so, do not wait until after 1 January 2015 to distribute the dividends or sell your substantial interest shares. This is because, in 2014, a one-off reduction in the box 2 rate still applies of 22 per cent, to the extent that the taxable income from a substantial interest is not higher than EUR 250,000. This yields a rate advantage of 3 per cent. Partners for tax purposes are each entitled to the decreased rate of 22 per cent on the first EUR 250,000 of income in box 2. This means that in 2014 they can receive a total amount of EUR 500,000 in dividends or sales proceeds from substantial interest shares at the reduced box 2 rate.

In 2014, are you making use of the temporarily reduced box 2 rate of 22 per cent by distributing dividends or selling your substantial interest shares? If so, do be aware that, on 1 January 2015, the sums obtained will fall under the capital yield base in box 3, due to the box 3 reference date being 1 January. That means that - depending on the value of your box 3 assets - you will pay 1.2 per cent deemed yield levy on the sums obtained. You can avoid this levy by using the sums obtained for consumer purposes before 1 January 2015.

Extended exemption for home acquisition gift via own bvWould you like to make use of the extended exemption for a home acquisition gift but do you not have sufficient private funds?If so, you may borrow the sum for the maximum untaxed gift from your bv. Until 31 December 2014 inclusive, under certain conditions you can gift up to EUR 100,000 free of tax for the own home of another person.

Relevant once again

Disclosure obligation for home acquisition debt contracted at own bv before 2013Are you considering borrowing money from your bv or a family member to purchase or improve your own home?If so, please note that, with effect from 2013, interest on this home acquisition debt is only deductible if - in addition to the normal conditions - you provide the Tax Authorities with the basic details of this loan correctly and in good time. These details must be provided no later than 31 December of the year following the year in which the loan was entered into.

Refinancing of home acquisition debt at own bvAre you intending to refinance your existing home acquisition debt at your own bv?If so, please note that, since 2013 - given unchanged circumstances and under certain conditions - interest is also deductible if a home acquisition debt is partially refinanced. The disclosure obligation also applies in this case.


Dividend instead of wagesAre you intending to pay yourself additional wages this year?If so, opting for a dividend distribution would be a more tax efficient alternative. In 2014, a maximum of 52 per cent income tax is being levied on additional wages, while a combined income and corporation tax burden of between 37.60 and 43.75 per cent applies to dividend distributions charged to the current annual profit. Consult your PwC advisor about the possible consequences for your pension accrual.

Redemption or sale of debts taxed in box 1Are you considering redeeming or selling a debt taxed in box 1 that is owed by your own bv?If so, make sure that you postpone the redemption or sale until after 1 January 2015, as this will save you a full year’s box 3 levy on the redemption sum.

Earlier publication of the annual accounts Are you involved in a bv in which all shareholders are also directors? If so, please note that, as of 1 October 2012, the signing of the annual accounts by the board of directors results in those accounts being immediately adopted. The law provides that annual accounts must be drawn up and signed by the board of directors within 11 months of the end of the financial year. Also, the annual accounts must be published within 8 days of their adoption. This legal provision results in a reduction in the period for publication. Whilst the deadline for lodging annual accounts at the Chamber of Commerce is normally 13 months after the end of the financial year, immediate adoption of the annual accounts has the undesired effect of ending the period for publication 11 months and 8 days after the end of the financial year, instead of after 13 months. You can depart from this legal provision, but in that case the departure must be laid down in the bv’s articles of association.

Timing of liquidity test important for dividend distributionsAre you a director of a bv that is intending to distribute a dividend?The distribution of dividend by a bv is subject to several conditions. For example, reserves required by law and the articles of association must not be used for dividend distributions, and shareholders have to obtain approval for distribution from the board of directors. The board of directors may only refuse to approve a dividend resolution passed by the shareholder(s) if the result of the so-called liquidity test, which has to be performed by the board of directors, is negative. This test involves the board of directors determining whether the bv will still be able to meet its debts and obligations following the dividend distribution. If it subsequently turns out that the bv can no longer fulfil its obligations after the dividend distribution, and that the board of directors could have foreseen this, then the board will be liable for the deficit resulting from the dividend distribution. The time to which liquidity test pertains is the moment when the company distributes the dividend to the shareholder(s). If a dividend resolution has already been passed, it is important that you recheck that the result of the liquidity test is positive at the time that the distribution is to be made. Should it subsequently turn out that the test result was not positive when the distribution was made, then you, as a director, run the risk of having to repay the deficit that resulted from the dividend distribution to the company.

Self-administered pension


Amend director/substantial shareholder’s pension letter before 1 January 2015Have you, as a director/substantial shareholder, already amended your pension scheme in line with the ‘Wet Witteveen 2015’?As from 1 January 2015, your pension scheme must comply with the Reduction of Maximum Pension Accrual and Premium Rates and Maximum Pensionable Income Act (‘Wet Witteveen 2015’). This means, for example, that maximum pension accrual is being reduced by 13 per cent (1.657 per cent at age 67 for final pay schemes). You may continue to opt to retire before the age of 67, but in that case the accrual rate must be further reduced.


Do you, as a director/substantial shareholder, have a pensionable income in excess of EUR 100,000?As from 2015, you will no longer be able to accrue tax-facilitated pension for salary in excess of EUR 100,000, because pensionable income will be capped at EUR 100,000. This may also impact upon your surviving dependants’ pension. Your pension letter must be amended accordingly. At the same time you might want to make sure that your pension scheme still suits your wishes. Perhaps it is advisable to switch to a defined contribution scheme. In that case, in principle there are no restrictions on dividend distributions (see below at ‘Relevant once again’). You might even want to completely stop accruing pension, in which case you should bear your customary salary in mind.

Will your pensionable income as director/substantial shareholder be capped as of 2015?*In connection with the capping of pensionable income above EUR 100,000, an alternative is being introduced as of 1 January 2015 in the form of a net pension or net annuity. It is a new voluntary net savings facility. The deposits are not tax-deductible and the distributions are untaxed. If all conditions are satisfied, a box 3 exemption will apply for either form. The tax treatment of net pension and net annuity is the same, but it is important to carefully consider the options from a civil law perspective. Differences between the schemes include the consequences on divorce, the options for use and the potential providers. It is not possible to self-administer the net pension.

Valuation of pension provision in annual accountsWill the amended guidelines for annual reporting affect the valuation of your pension provision in the annual accounts?With effect from the financial years that start in 2014, the provision for self-administered pension schemes for director/substantial shareholders may no longer be valued in accordance with tax principles. The Dutch Accounting Standards Board has decided that, in the annual accounts, the valuation of the provision must be based on the principle of ‘best estimate’. For the sake of completeness: this does not apply to small legal entities, who may continue to draw up their entire annual accounts, including the valuation of pension provision, in accordance with tax principles.

Relevant once again

Dividends distributed or to be distributedAre you taking commercial pension provisions into account when distributing dividend?Are you intending to distribute a dividend, for example based on the temporarily reduced substantial-interest rate in 2014? Or have you distributed dividends in the last seven years? And did you take commercial pension provisions into account when determining the freely distributable reserves? If the freely distributable reserves are insufficient on the date on which it is resolved to distribute the dividend, the Tax Authorities may take the view that the pension has been waived or that the pension has already been received. This may lead to the (market) value of the pension entitlements accrued being taxed progressively at 52 per cent, with a revisionary interest rate of 20 per cent also being payable. The market value is considerably higher than the provision for taxes, such that the tax owed may be equal to or even in excess of the assets available. We recommend that you arrange for a calculation to be made before you distribute a dividend.


Weighing-up sources of income after pension commencement dateAre you aware of the various sources of income that may be available after your retirement?You can save for your old age provision in boxes 1, 2 and 3. Each income scheme has its own tax treatment. You are free to decide which source(s) of income suit you best from a tax perspective.

Private pension company cover ratioHave you recently assessed the cover ratio of the private pension company?It is wise to assess the cover ratio of the private pension company on a regular basis. This is because the Tax Authorities may take the view that, where a cover ratio is too low, the pension has been waived. This would have various tax consequences. This also applies to the question of whether the investment return profile of the assets is still in line with the scope of the present and future commercial pension provision.In certain circumstances, you may reduce (write down) pension entitlements when the cover ratio is inadequate. Under certain conditions, this would be possible if the cover ratio is lower than 75 per cent, taking account of the tax value of the pension provision and the market value of all other assets and liabilities. For example, the dividend distributed in the last seven years would be relevant.

Postponement of pension commencement dateAre you planning to postpone your pension commencement date?If you continue working after your retirement date, you can postpone your pension. If you were born before 1 January 1950, you may postpone your pension to the state pension age without continuing to work. The postponement of the pension commencement date must be formally recorded before the retirement date is reached (in the minutes of the General Meeting and in an addendum to the most recent pension agreement). In that event, the pension entitlements must also be actuarially recalculated. This recalculation will result in an increase in the annual payment.

Pension entitlement more than the 2014 thresholdDoes your prorated accrued pension entitlement amount to more than EUR 56,531 as at 31 December 2014?If so, it may be desirable to discontinue future pension accrual. In the future, 52 per cent tax will be paid on taxable income of EUR 56,531 or more (partly dependent on your deductible expenses, including mortgage interest). In due course, it would be more advantageous from a tax perspective to supplement your income by means of an annual dividend (taxed at a maximum of 43.75 per cent). However, if you discontinue pension accrual, you need to ensure that the total payment is at arm’s length. Discontinuation of future pension accrual generally has to be adjusted by an increase in the total gross payment. After all, an employee would not be acting at arm’s length if he were to waive the future pension accrual without receiving some form of compensation from the employer.

Employee contribution for pension accrualDo you pay an employee contribution to a self-administered pension scheme?Depending on your salary level, it may be advantageous to implement a (higher) employee contribution for the self-administered pension scheme, which would reduce your gross taxable income and allow you to save up to 52 per cent tax. However, the (higher) employee contribution would result in a lower allowable deduction for the private limited company (25 per cent maximum). In that case, in combination with a dividend distribution, the tax burden would amount to a maximum of 43.75 per cent. Depending on your personal situation, implementing a (higher) employee contribution may provide a permanent tax advantage of 8.25 per cent.

Consequences of the raised standard pension retirement ageDo you think that accruing pension will still be interesting for you once the pension commitment has been adjusted as of 1 January 2015?If not - because, for example, you have reached the threshold of EUR 56,531 -, amending the pension agreement in line with the new legislation may not be the obvious choice. In your situation, it may be wise to convert your current final pay scheme into a defined contribution scheme in the future.


Compliance with private pension company requirementsAre your pension commitments administered by a bv?If so, you must comply with certain rules, including those in the Decree of 3 July 2008, no. CPP2008/447M. For example, pursuant to this Decree, a commercial premium contribution must be passed on since 1 January 2011. The financing agreement must also comply with the Decree of 3 July 2008 and must be drafted afresh. It may be wise to modify the legal structure so as to limit the consequences of and the administrative burden caused by the Decree of 3 July 2008.

Minimum of 10 per cent (indirect) control in employer bvDo you (directly or indirectly) own less than 10 per cent of both the beneficial entitlement to and the legal control over the shares in the bv?If so, you cannot accrue any further self-administered pension. If you wish to do so nonetheless, it would be advisable to take action. Please note: since the introduction of the legislation relating to the flex bv, it is important that, for self-administered pension accrual, you own 10 per cent of the shares with voting rights.

Post indexation of pensionHas the pension already commenced but is the annual awarded post indexation yet to be performed?If so, the Tax Authorities may take the view that pension has been waived, which would lead to undesirable tax consequences. We recommend that you obtain proper information about the action to be taken.

Employer and employee


Amendment and mandatory implementation of the work-related costs scheme as of 1 January 2015*As at 1 January 2014, had you not yet switched to the work-related costs scheme?On 1 January 2015, the transitional regime for the work-related costs scheme will cease to apply. Don’t forget to begin implementing this new scheme straightaway, as its application by all employers is mandatory with effect from 1 January 2015. The switch will require efforts by both your payroll administration and accounting department, and it may also be necessary or desirable to make amendments to employment conditions.

Have you already switched to the work-related costs scheme?The work-related costs scheme is being amended on a number of essential points as of 1 January 2015, including the introduction of a group scheme and the implementation of a number of new specific exemptions. It is advisable to take stock of what these changes will mean for your organisation without delay.

Unemployment benefit changes as of 1 July 2015Do you know what impact the unemployment benefit changes will have on your employees?The legislative proposal for the Work and Security Act, which was recently adopted, includes a number of changes as regards unemployment benefit. A few changes will be implemented on an expedited basis as from 1 July 2015 instead of 1 January 2016. They concern the transition from settlement on the basis of hours to settlement on the basis of income, and the measure that all socially-accepted work will count as suitable work after six months of unemployment benefit.

Introduction of ‘bridge unemployment benefit’*Can you reduce your transition costs when recruiting new employees?The introduction of the new ‘bridge unemployment benefit’ will take place on 1 January 2015. This measure supports employers in their facilitation of the ‘from work to work’ process. The employees concerned will retain their unemployment benefit during their (re)training, and will also receive salary for the hours worked. This will lead to a reduction in transition costs for the new employer.


Commutation of occupational disability annuities*Are you occupationally disabled and would you like to convert your annuity capital into cash?As from 1 January 2015 it will be possible for people with long-term occupational disability to commute their annuities partially or entirely without incurring any revisionary interest. They can also use the annuity capital to provide an income in the event of occupational disability. However, such commutation facility is subject to certain conditions. For example, the maximum commutation amount per calendar year has been capped. Payroll taxes will be withheld on the commutation amount in the usual way. Incidentally, the commutation facility will also apply to the net annuity introduced on 1 January 2015.

Withdrawal of life-course savings balance taxed in respect of 80 per cent*Do you still have a life-course savings balance and would you like to have this at your disposal?In 2012 the life-course savings scheme was terminated. In 2013 it was possible to withdraw the entire balance (up to the amount of the entitlements as at 31 December 2011). In that event only 80 per cent was taxed. This possibility is reintroduced in 2015 for remaining savings as at 31 December 2013. If you have a life-course savings balance, we recommend that you check whether this would be an interesting option for you.

Changes to dismissal law as of 1 July 2015Do you know what this will mean for your enterprise?Dismissal law is changing with effect from 1 July 2015 as a result of the Work and Security Act. For example, employers will no longer be able to choose between the subdistrict court and the Employee Insurance Agency (UWV) in the event of dismissal. Where the dismissal is for economic reasons, the prescribed dismissal route will be the UWV procedure. Where the dismissal is due to personal circumstances (unsatisfactory performance), a request for termination of employment will have to be submitted to the subdistrict court. What is also new is that there will be a right of appeal as regards both of these routes. The possibility of concluding a termination agreement will remain, but under the new dismissal law the employee may revoke his assent within two weeks. In addition, the subdistrict court formula is being replaced by a transition payment, which, in most cases, will be cheaper for employers. For a period of service of up to 10 years, the transition payment will amount to one third of the monthly salary per year of service worked. For every year of service in excess of 10 years, the transition payment will amount to half of the monthly salary. The payment will also be capped.

Mandatory notice period for termination of temporary employment contractDoes your enterprise make use of temporary employment contracts?Notice does not need to be given to terminate temporary employment contracts, as they expire by operation of law at the end date. This is still the case, but you cannot simply wait for the end date. The reason is that, under the Work and Security Act, as of 1 January 2015, employees with temporary employment contracts of six months or more must be informed, at least one month in advance, and in writing, whether their employment contract is going to be extended. If you do not observe this notice period, then, in principle, the employee is entitled to compensation equal to one month’s salary. You could consider including a notice clause in the employment contract, but it is highly doubtful whether such a clause would be upheld in court. In any case, it is important that you amend your HR processes and HR administration in line with the new rules.


Non-competition and non-solicitation clauses no longer allowed in temporary employment contractsDo you make use of non-competition or non-solicitation clauses in your employment contracts?As of 1 January 2015, under the Work and Security Act, the inclusion of non-competition and non-solicitation clauses in temporary employment contracts concluded on or after 1 January 2015 will no longer be permitted. You may only depart from this rule if you have a compelling business interest and you have explained the reasons for this in writing in the employment contract. Usually, such explanation will have to be tailored to the circumstances. Without a proper explanation of reasons, you will not be able to rely on the non-competition or non-solicitation clause. These new rules do not apply to temporary employment contracts concluded before 1 January 2015, except when such contracts are extended on or after that date.

Provisions on succession of temporary employment contracts: from ‘3-3-3’ to ‘3-2-6’Are you taking the new provisions on succession into account when deciding on the length of temporary employment contracts?Under the Work and Security Act, the old provisions on succession of temporary employment contracts (the ‘ketenregeling’) are being replaced as of 1 July 2015. Until then, a maximum of three temporary employment contracts may be concluded, with a total duration of 36 months. This chain is broken by an interval of more than three months between two successive contracts. Under the new provisions on succession, a maximum of three successive temporary employment contracts may be concluded, with a total duration of 24 months. The minimum break between two contracts will become six months and one day, making it more difficult to arrange for employees to leave work on a temporary basis in order to avoid a permanent contract. If an employment contract is concluded after 1 July 2015, previous temporary employment contracts also count for the purposes of the provisions on succession. If you have employees who have been in service for almost two years, you may wish to consider offering a third temporary (one year) contract before 1 July 2015 so as to avoid being bound by the new 24-month rule.

Relevant once again

Check your Return to Work (Partially Disabled Persons) Regulations (‘WGA’) decisionAre you, as an employer, not a self-insurer for WGA purposes? In that event, you will soon be receiving the decision on your differentiated WGA contribution from the Tax Authorities. As from 2014, in addition to the current differentiated WGA contribution, the differentiated contribution for the Return to Work Fund will consist of two differentiated contributions for safety-netters under the Sickness Benefits Act (ZW) (flexible workers under the WGA and flexible workers under the ZW, respectively). In practice, this decision sometimes proves to contain errors. In view of the relatively short timescale for filing objections, we recommend that you check the decision thoroughly and without delay. A proper check could result in contribution savings.

Pension for employer and employee


Amendments to pension scheme before 1 January 2015 Have you already amended your pension scheme in line with the ‘Wet Witteveen 2015’?As from 1 January 2015, your pension scheme must comply with the Reduction of Maximum Pension Accrual and Premium Rates and Maximum Pensionable Income Act (‘Wet Witteveen 2015’). The Act lowers the maximum accrual percentages considerably, and caps pensionable income at EUR 100,000. For salaries higher than EUR 100,000, tax-facilitated pension will no longer be accruable on the sum in excess of this limit.


As at 1 January 2015, will your pension scheme fail to comply with the ‘Wet Witteveen 2015’?If so, your employees’ entire accrued pension in this pension scheme will be subject to tax in one go. We therefore recommend that you reach an agreement with your employees (and/or their representatives) prior to 1 January 2015 regarding the possible amendments of your pension scheme. If this proves not to be possible, you can in any event prevent your employees’ entire accrued pension from being taxed immediately in one go. To do so, you will need to submit a request to the Tax Authorities before 1 January 2015 for your pension scheme to be split into a part that complies with the Wet Witteveen 2015, and a part that does not.

Do you have employees who earn more than EUR 100,000?*As from 1 January 2015, you will no longer be able to accrue tax-facilitated pension for such employees for salary in excess of EUR 100,000. In connection with this, a new voluntary net savings facility with a box 3 exemption is being introduced as of 1 January 2015 for pensionable salary above EUR 100,000. This can take the form of a net pension or net annuity.

Optimising pension for past years of serviceDo you have employees who would like to reduce any pension shortfall that they may have?If so, under certain conditions they may be able to utilise the scope for tax-deductible pension accrual that they did not use in the past. As an employer, you can make an additional pension commitment to your employees for this purpose. Your employees can also purchase additional pension themselves via an additional voluntary pension module, provided that your pension administrator offers this option. When calculating the maximum pension that can be purchased, the tax legislation as at the time of purchase must be applied. With effect from 1 January 2015, the options for accruing tax-deductible pension will be restricted. This means that the maximum pension that can be purchased for past years of service will be lower in 2015 than in 2014. Therefore, if you are planning to purchase additional pension for your employees for past years of service, or if your employees are planning to do so themselves, we recommend that the purchase be made before 2015.

Cross-border employment


Qualifying foreign taxpayers Do you live outside of the Netherlands and have you chosen to be treated as a resident taxpayer for 2014?In that case, up to and including 31 December 2014 you are entitled to the same deductible items and personal allowances as a resident of the Netherlands. With effect from 1 January 2015, this optional scheme is being replaced by a scheme for qualifying foreign taxpayers, thus terminating the option. As a foreign taxpayer, you will only be eligible for deductible items and personal allowances if you receive 90 per cent of your worldwide income in the Netherlands and reside in an EU country or in Liechtenstein, Norway, Iceland, Switzerland, Bonaire, Sint Eusatius or Saba.

Pension accrual on allowances and benefits provided to your employeesDo you have employees for whom pension is being accrued and who have been granted the 30 per cent ruling?If so, as from 1 January 2015 you will probably be able to accrue pension for these employees on the sum pertaining to the 30 per cent ruling too. This is due to the so-called work-related costs scheme, the ‘new’ regime for tax-free allowances and benefits. This scheme, which has been available for use since 2011, will be mandatory with effect from 1 January 2015. Under this scheme, all tax-free allowances and benefits, including the 30 per cent ruling, form part of the wage for final levy purposes and thus form part of the taxable wage. If you apply the work-related costs scheme you can thus accrue pension for your employees on the 30 per cent ruling sum without having to meet additional conditions to this end. Currently, accrual of pension on the 30 per cent ruling sum is not permitted in some situations. Under the existing regime, pension may be accrued on all wage components that form part of the taxable wage, with the exception of company cars (and, in the case of final salary schemes, variable wage components). This means that, up to and including 31 December 2014, if the work-related costs scheme has not been applied then pension may not be accrued on tax-free allowances and benefits, including the 30 per cent allowance, unless a number of conditions have been met, such as the introduction of a cafeteria scheme.


Severance pay in an international context Have you recently dismissed an employee who was (partially) working abroad at that time or shortly beforehand?If so, you or your employee may have to deal with the severance pay being taxed in more than one country. Dutch case law directs how the tax levy should be allocated under the Dutch approach. With its commentary in the 2014 OECD Model Tax Convention on 15 July 2014, the OECD has also provided guidelines on the international tax allocation of the various allowances on the termination of employment. The approach prescribed by the OECD differs from the guidance in Dutch case law in a number of respects. The State secretary of Finance has indicated earlier that the OECD commentary will be applied in a dynamic fashion. This means that, after 15 July 2014, the Tax Authorities are expected to apply the 2014 OECD commentary as its guideline for determining the allocation of any Dutch right to levy tax in dismissal situations, even when the commentary differs from the Dutch case law. Consequently, it may be important, where appropriate, to (re)determine whether and to what extent the Netherlands has a right to levy tax on the payment(s) received.

Relevant once again

The 150 km boundary in the 30 per cent rulingDo you have employees from the border regions who utilise the 30 per cent ruling?If so, they might lose their 30 per cent ruling in the near future, due to the 150 km boundary in effect since 1 January 2012. If you wish to retain these rights, you can join in the proceedings being conducted by PwC for employees who do not satisfy the 150 km boundary rule.

The salary standard in the 30 per cent rulingDo your employees already satisfy the salary standard for application of the 30 per cent ruling?Do you have university-educated employees who turned thirty this year, full-time employees who have transferred to part-time work, or employees to whom the new 30 per cent ruling conditions apply after five years? If so, they might not meet the salary standard any longer. For 2014, the default salary standard is set at EUR 36,378 taxable income per annum, and the reduced salary standard is EUR 27,653 per annum. Where appropriate, you could consider reducing the tax free amount under the 30 per cent ruling so that the salary standard is still met.

Income tax rates in payroll tax return under the 30 per cent rulingDo you have employees under the 30 per cent ruling without personal allowances or other income?If so, you can make an appointment with the Tax Authorities regarding the application of the personal income tax rates in the payroll tax return. In that case, the obligation to submit a personal income tax return for these employees will no longer apply.

Health Insurance Act ContributionDo you have employees working on the basis of a formal salary split?If so, it is important that you satisfy the registration and withholding obligations for each separate formal employment of such employees. In fact, you are required to pay the Health Insurance Act contribution and the employee insurance scheme premiums in the Netherlands for each separate employment. You may also consider a material salary split. In that case, there is a single formal employer, which means that the Health Insurance Act contribution and employee insurance scheme premiums (subsequently) only have to be withheld once.

Foreign working daysDo you have employees who have foreign working days and for whom you withhold Dutch payroll tax on their full income? If so, it is important to determine, based on international tax rules, whether the Netherlands is entitled to levy tax on the employee’s full employment income. In the event that tax on (part of) the employment income is allocated to another country under a treaty for the avoidance of double taxation, you can take that into account in the Dutch payroll administration. In that case, you can limit the withholding of Dutch payroll tax to the portion of the employment income that is allocated to the Netherlands. This is also relevant when determining the level of the discretionary margin of 1.5 per cent (2014) under the work-related costs scheme and any final levy of 80 per cent that may be owed. For the purposes of this exclusion of income, it is important that the employee keeps an up-to-date record of his working days in the Netherlands and abroad.


Social security


Children's living expenses deduction to be cancelled*Do you pay child maintenance or other costs in respect of your child’s living expenses?As of 2015, the deduction for the living expenses of children under the age of 21 will cease to apply. Consequently, it may be wise to pay certain living expenses for your child by the end of 2014. The living expenses that you incur for your child must exceed a certain threshold amount before a fixed deduction can be taken into account in the relevant quarter.

Will the living expenses that you incur for your child in the last quarter of 2014 be less than the threshold amount?If so, it may be advisable to make certain payments before the end of 2014 in order to qualify for the fixed deduction. This will no longer be possible after 31 December 2014, as this deductible item will then be incorporated into the new form of children’s arrangements taking effect as of 2015.

Relevant once again

Foreign contributionsDo you have employees who are subject to foreign social security?In many cases, the fiscal processing of foreign social security contributions results in a deductible item as regards the taxable wage in the Netherlands. For example, for employees subject to the Belgian or German social security system, a deductible item can be attained by means of a quite simple payroll accounting adjustment. A similar deductible item is possible for various countries, based on a statement from the Tax Authorities.

Gifts and inheritances


Temporary extended exemption for home acquisition giftAre you considering making a gift for someone’s home?Until 31 December 2014 inclusive, under certain conditions you can still gift up to EUR 100,000 free of tax to someone else for the purchase or renovation of his/her own home, as well as for redemption of the mortgage or a residual debt following sale of their home. Old residual debt incurred before 29 October 2012 also qualifies. One of the conditions is that the recipient must have used the amount for one of these purposes before 31 December 2014. Make sure that you make the gift in good time, as the banks need about a month to process the administration of a gift for the redemption of a mortgage. Until the end of this calendar year, no further requirements are imposed on the age of the recipient or on the relationship between you, as the giver, and the recipient. If the giver dies within 180 days of the gift, the recipient will owe no inheritance tax on the EUR 100,000.

Does the gift relate to a home under construction on which the recipient can only spend part of the amount in 2014?*If the recipient cannot spend the full amount given for a home under construction in 2014 due to an insufficient number of plots with expired construction periods, under certain conditions he may spend the remainder on the next construction periods in 2015.

Do you want to make a gift for the renovation of someone’s home?*If the gift is intended for the improvement or maintenance of someone’s home, the recipient may spend the sum not only in 2014 but also in 2015 and 2016. However, the recipient must already own the home in 2014.


Have you previously made use of an increased exemption for a gift from your parents?If so, you are entitled to an exemption of EUR 100,000 less the amount of your previous exemption. The deduction only applies if the gift is from your parents once again. For example, if you made use of the regular home acquisition gift exemption of up to EUR 51,407 in 2013, you can supplement this to EUR 100,000 in 2014.

Inheritance of substantial interest shares in an investment companyHave you recently inherited substantial interest shares in an investment company?If so, you may distribute a dividend to yourself to pay the tax claim that relates to the acquisition under inheritance law. This dividend distribution can take place without a substantial interest levy being imposed on the inherited shares or on the non-inherited shares in the same company. However, it is important that you submit a request to the tax inspector for this purpose. A condition in this regard is that you distribute the dividend to yourself within two years of the death of the testator.

Have you inherited substantial interest shares in an investment company, in respect of which the testator died more than two years ago but not earlier than 1 January 2010? And has no dividend on the substantial interest shares been distributed as yet? In that case, under certain conditions you may still distribute the dividend and may submit a request to distribute dividend from the investment company without a substantial interest levy being imposed. This pertains to dividend income on the inherited shares and also on the non-inherited shares in the same company. However, an important condition that applies here is that the dividend be distributed to you in 2014 and that your application be submitted to the tax inspector before the end of 2014.

Have you inherited substantial interest shares in an investment company, in respect of which the testator did not die earlier than 1 January 2010, and have you received a dividend distribution in respect of these? And have you submitted no request for untaxed dividend to be distributed on inherited shares in an investment company and/or have you had to pay a substantial interest levy (full or partial) on the dividend income? In that case, you may still submit a request to the tax inspector to distribute dividend from the investment company without a substantial interest levy. This pertains to dividend income on the inherited shares and also on the non-inherited shares in the same company. This applies even if the relevant personal income tax assessment has already been irrevocably fixed. One of the conditions with regard to this is that you submit your request to the inspector by the end of 2014. The above does not apply if all or some of the shares have been sold since the date of death of the testator.

Relevant once again

Tax return deadline for giftsHave you made a gift in 2014?If so, do not forget to file your tax return before 1 March 2015. This applies to all gifts subject to tax (to the extent that the amount given exceeds the exemption) and to gifts for which the one-off (additional) increased exemption has been invoked in 2014. You may file your tax return using the official gift tax return form available for download via www.belastingdienst.nl or by writing a letter to the Tax Authorities.

Tax return deadline for inheritance taxHave you received something from an inheritance in 2014?If so, the executor must file a return within eight months of the death of the testator. If the testator has not appointed an executor in his will, you must file a return within the stated period as beneficiary. This applies to all taxable acquisitions under inheritance law (in so far as these exceed the exemption). You can request a return form from the Tax Authorities. You may also request postponement for filing the return, but with effect from eight months after the death the beneficiaries have to pay interest on the amount of the assessment.


Annual gift tax exemption for childrenAre you intending to make gifts to your children (stepchildren, foster children or the widow(er) of your deceased child)?If so, bear in mind that:• in the 2014 calendar year, an amount of up to EUR

5,229 per child is exempted, and everything above that is subject to tax;

• whether or not you have exceeded this annual gift tax exemption will be calculated by adding up all gifts you have made to your child in 2014;

• if you gift an amount greater than EUR 5,229, you can make use of two exemptions in two calendar years by splitting the gift into two parts: one in 2014 and the other on or after 1 January 2015;

• gifts of money and securities (amongst other things) do not need to be made in any prescribed form. Nevertheless, it is wise to record such gifts in writing if you wish to include matters such as an exclusion clause (or ‘anti-son-in-law’ clause);

• if you wish to gift securities to your child, give your bank the transfer order well before the Christmas holidays to ensure that the transfer is effected in 2014.

One-off increased gift tax exemption for childrenAre you intending to make gifts to your children (stepchildren, foster children or the widow(er) of your deceased child)? If so, bear in mind that:• as regards gifts to a child (or his/her partner) aged

between 18 and 40, an increased exemption from gift tax on a one-off basis (up to EUR 25,096 for 2014) can be used;

• subject to certain conditions, this one-off exemption is as much as EUR 52,281 for a child’s expensive course of study;

• you may also apply the one-off increased exemption if your own child is older than 40 but his/her partner is between the ages of 18 and 40.

Gift tax exemption for grandchildren and third partiesAre you intending to make gifts to your grandchild or a third party?If so, an exemption from gift tax of EUR 2,092 applies in 2014, and everything above that is subject to tax. Please note that, depending on the amount acquired, the rate is between 18 and 36 per cent for a grandchild and 30 to 40 per cent for ‘third parties’.

Notarial acknowledgement of indebtednessWould you like to make a ‘gift on paper’ without actually transferring assets but by acknowledging indebtedness of a sum to your children in a notarial deed?If so, please note that you are required to pay interest at an arm’s length rate of 6 per cent per year in respect of the sums still owed. If you do not pay the 6 per cent interest in a year, there are ways to rectify this.

Interest-free or low-interest-bearing loans payable on demandIn 2014, have you granted (a child, for example) an interest-free or low-interest-bearing loan payable upon demand?If so, your child is required to pay gift tax on an annual basis on the difference between 6 per cent interest and the interest rate actually stipulated. You can remedy this for the future by amending the conditions of the loan so that it is no longer payable on demand and bears an arm’s length interest rate. An alternative is to arrange for your child to pay you interest at 6 per cent after all.

Remission of inheritance tax in exchange for art and cultural assetsDo you want to pay inheritance tax with artworks or cultural assets from your inheritance?If so, you can submit a request for remission of inheritance tax. The remission can be up to 120 per cent of the value of the objects that you want to transfer to the State, but must not be more than the tax and interest on tax owed. To this end, an advisory committee first determines whether the cultural assets offered to it for assessment from estates have sufficient significance in terms of national artistic or cultural heritage. Another possibility is that prior to his death a testator asks whether objects in his estate meet the conditions.


Charities


Disclosure requirements for recognised charities/public benefit organisations (ANBIs)Do you wish to acquire or retain ANBI status?If so, bear in mind that the electronic disclosure requirements for public benefit organisations (ANBIs) have been tightened with effect from 1 January 2014. For example, the financial accounting must be posted on the Internet within six months of the end of the financial year and the names of the directors must be disclosed. A very limited number of endowment funds are exempt from the requirement to disclose the names of directors, because of a realistic threat to personal safety. For privacy reasons, religious organisations using the legal form ‘kerkgenootschap’ are not obliged to publish directors’ names, either.

Tightened information obligation for former ANBIsHave you lost or will you be losing your ANBI status?If so, bear in mind that effective as from 2014, former ANBIs are required to submit their annual accounts and annual report with a specified list of donations at their own discretion. If you, as a former ANBI, do not meet this information obligation as prescribed or do not do so in good time, this is considered a violation. If this involves intent or gross negligence, the penalty fine can be as much as EUR 20,250. The information obligation applies until the capital destined for the purpose for the public benefit has been spent in its entirety.

Regular donationsAre you considering making a regular donation?With effect from 1 January 2014, a notarial deed is no longer required for tax-deductible regular donations to ANBIs and associations with more than 25 members. A private agreement will suffice and a model can be downloaded from the Tax Authorities’ website. Both the recipient organisation and the donor must save a copy of the signed agreement as proof in their administrative records.

Cultural organisationsDo you want to donate to an ANBI that is designated as a cultural organisation?If so, your donation may be multiplied by 1.25 in respect of the personal income tax deduction for gifts, subject to a maximum of EUR 1,250.

Do you want to donate to a cultural organisation via your bv?If so, your donation may be multiplied by 1.50 in respect of the corporate income tax deduction for gifts, subject to a maximum of EUR 2,500. As regards both personal income tax and corporate income tax, this multiplier may be applied to a maximum of EUR 5,000 for cultural gifts. The European Commission has definitively approved the multiplier for gifts to cultural organisations. The multiplier initially applied for five years (2012-2016), but this period has been extended up to and including 2017.

Relevant once again

Public benefit organisations (ANBIs)Do you want to donate to an ANBI?If so, subject to certain conditions, your donation is deductible for personal income tax purposes. Depending on your wishes, a variety of structures can be used for donations. All gifts and inheritances acquired by ANBIs are also exempt from gift tax and inheritance tax under certain conditions.

Do you want to donate to an ANBI via your bv?If so, a corporate income tax deduction for gifts applies of up to 50 per cent of profits, subject to a maximum of EUR 100,000. All gifts and inheritances acquired by ANBIs are also exempt from gift tax and inheritance tax under certain conditions.

Social benefit organisation (SBBI)Do you want to donate to an SBBI, such as a sports club, community centre or music society?If so, bear in mind that a donation of this type is only deductible for personal income tax purposes if it is a regular donation. Subject to certain conditions, a donation or inheritance acquired by an SBBI is exempt from gift tax and inheritance tax.


SBBI supporting foundations Do you want to donate to an SBBI supporting foundation (a foundation set up exclusively for the purpose of collecting money for an SBBI)?If so, subject to certain conditions, your donation is deductible for personal income tax purposes. Subject to certain conditions, a donation or inheritance acquired by an SBBI supporting foundation is exempt from gift tax and inheritance tax.

Do you want to donate to an SBBI supporting foundation via your bv?If so, a corporate income tax deduction for gifts applies of up to 50 per cent of profits, subject to a maximum of EUR 100,000. Subject to certain conditions, a donation or inheritance acquired by an SBBI supporting foundation is also exempt from gift tax and inheritance tax.

VAT taxable person


Telecommunications, broadcasting and electronic services taxed in country of customer*Are your systems and processes geared up for the new VAT rules for telecommunications, broadcasting and electronic services? On 1 January 2015, the VAT rules for determining the location where telecommunications, broadcasting and electronic services are supplied are going to change. From that moment onwards, such services will always be taxed in the country of the customer’s location. In this regard it will no longer be relevant whether the customer is a taxable person or a consumer, or whether the customer is located within or outside the EU. This means that suppliers of such services must have their systems in good order so that they can meet all VAT obligations. They also need to have set up procedures to enable the customer location to be determined. For private EU customers, this means that from now on they will also be charged local VAT for such services from foreign suppliers.

Extension of lower VAT rate for renovation or repair of homes*Are you planning to renovate a home (or have it renovated) in 2015?The temporary measure whereby, if you renovate or repair a home, the lower VAT rate of 6 per cent applies to the labour component, has been extended to 30 June 2015. This is conditional on the home in question having been taken into occupation more than two years ago. After 30 June 2015, the general rate of 21 per cent will apply once again.

Relevant once again

Negative declaration after purchase or sale of immovable propertyHave you (or your buyer) not used a recently bought property principally for VAT taxable activities in 2014?In the event that a VAT taxable transfer is elected in respect of transfer of immovable property, the buyer has to declare in writing that he will be using the immovable property for purposes for which he is entitled to deduct VAT for at least 90 per cent. If the buyer does not use the property for such activities in the period covering both the financial year of transfer and the subsequent financial year, he must notify the seller in writing within four weeks of expiry of this reference period (sending a copy to the tax inspector). Such declaration may result in the original seller of the immovable property having to pay back VAT deducted at an earlier stage (such as VAT on civil-law notary’s expenses, estate agent’s expenses and the costs of advice, and any ‘adjustment VAT’). We therefore advise sellers to include clauses in their purchase agreements regarding the liability for this VAT loss.


Private use of a company carHave your staff (or other business relations) had a company car at their disposal in 2014, and was this car also used for private purposes (including commuting)?If so, you are required to pay VAT on that private use. This can be done, for example, by paying 2.7 per cent of the list price of the car (including VAT and private motor vehicle tax (‘BPM’)) when filing your tax return. There are exceptions, such as if you provide a car that is more than five years old, if the user keeps proper mileage records or if you charge the employee a contribution for the use of the car. We advise you to object to the VAT adjustment in a timely manner, as it is debatable. Your PwC advisor can help you with this.

Private use of company goods and servicesHave your staff (or other business relations) made use of company goods or services, other than immovable property or a company car?If so, it is highly likely that the VAT (or part of it) deducted from the costs of these goods and services will need adjustment. There are various means to this end, the most significant one being the Decree of 1968 concerning exclusion from the right to make deductions from turnover tax. Under that Decree, all ‘supplies’ to staff and other business relations are aggregated and, if their value exceeds EUR 227 per person in one year, the VAT on these supplies is not deductible. There is another adjustment mechanism regarding expenditures made for the benefit of the entrepreneur himself: the VAT levy on deemed supplies. For an exact calculation of the VAT to be adjusted in connection with private use, you are advised to contact your PwC advisor. Be sure to bear in mind that other rules for VAT adjustment in connection with private use apply to company cars and real estate.

Change to capital goods used for both taxable and exempt purposesAre capital goods being used in your company for VAT taxable supplies as well as for VAT exempt supplies, and does the ratio between the taxable use and the exempt use differ at the end of the (financial) year from the ratio applied when the VAT on purchase was deducted?If so, you may need to adjust the VAT originally deducted based on this difference. Bear in mind that, if there has been an increase in exempt use, you may have to repay VAT. If the taxable use has increased, you can still apply for a refund of part of the VAT not deducted earlier.

VAT-taxable lease or let of immovable propertyDo you lease or let immovable property with VAT?If so, bear in mind that during the first year of the lease, the tenant must submit a declaration to the lessor and the Tax Authorities that the ‘90 per cent requirement’ is satisfied. If the tenant proves at the end of the year to no longer meet the ‘90 per cent requirement’, he must submit a declaration to the lessor and the Tax Authorities within four weeks of the end of the financial year that he no longer uses the leased property for at least 90 per cent for activities for which he is entitled to deduct VAT. This ‘negative’ declaration must therefore be provided, if applicable, in January 2015.

VAT taxable purchase of immovable property in 2013 or 2014Did you buy immovable property in 2013 or 2014 with an option for taxable transfer?If so, within four weeks after the end of the year of transfer and the year following the year of purchase you must provide the vendor and your own Tax Authorities with a 90 per cent declaration. This means that the declarations with regard to purchases in 2013 and 2014 must be provided in January 2015. This may be either a positive or a negative declaration; for a limited number of entrepreneurs, a 70 per cent declaration applies.

Real estate


Purchase or sale of real estate around New Year*Are you planning to buy real estate?If so, transfer before 1 January 2015 is to be recommended, because in that case you will fall within the scope of the extended 36-month scheme in the event of subsequent sale. This may result in a higher sales return. The expanded six-month scheme for existing real estate ends on 31 December 2014 after having been temporarily extended to 36 months. As a result, prospective buyers of real estate may profit from a decreased transfer tax base, by virtue of which, on balance, the buyer only pays transfer tax on the surplus value. The extended scheme applies to real estate that is acquired with transfer tax before 1 January 2015. Thus, real estate that you purchase for the first time in late 2014 needs to be resold no later than the end of 2017.


Are you planning to sell new real estate that has been occupied as a business asset or has been let?If so, under certain conditions you are exempted from transfer tax in the event of overlap with VAT. The overlap scheme had already been temporarily extended from 6 to 24 months and ends on 31 December 2014. It is also referred to as the project developer resolution. In order to profit from the extensions referred to above, effecting your real estate transaction before the end of the year could be highly important.

Cars


Purchase of a highly fuel-efficient car or a company car*Are you planning to purchase a highly fuel-efficient car or a company car soon?If so, make sure that you are fully aware of the BPM consequences. It may be more advantageous to purchase a car in 2014. For example, as of 1 January 2015, there will be an additional tax bracket for Private Motor Vehicle and Motorcycle Tax (belasting op personeneauto’s en motorrijwielen, ‘BPM’). BPM will then be payable for every car with emissions of 1 g/km upwards (in 2014 it was payable for CO2 emissions of at least 85 g/km for diesel engines and CO2 emissions of at least 88 g/km for other engines). In addition, with effect from 1 January 2015, only cars without CO2 emissions (so-called zero-emissions cars) will be BPM exempted. Also, as of 1 January 2015, the BPM rates and brackets will be the same for cars with diesel engines as for cars with other engines. A diesel surcharge will continue to apply for cars with a diesel engine, dependent on their CO2 emissions.

Are you planning to purchase a highly fuel-efficient car or a company car in approximately a year’s time?If so, it may be desirable to purchase the car before the end of 2015. The BPM CO2 thresholds in the BPM tax brackets are being tightened up once again as per 1 January 2016. The addition to income tax percentages will also be changing as from that date. For example, as of 1 January 2016, an addition of 7 per cent will apply for zero-emission cars (for comparison, the current addition for such cars, applicable since 1 January 2014, is 4 per cent). As of 1 January 2016, the exemption from motor vehicle tax (motorrijtuigenbelasting, ‘MRB’) for cars with very low CO2 emissions (0 to 50 g/km) will also cease to apply. Instead, such cars will be subject to the half rate for MRB. The MRB exemption will only remain for cars with an electric motor that are fuelled exclusively by a hydrogen-based fuel cell, and for cars with a combustion engine that can be fuelled by hydrogen.

Relevant once again

Intention to buy a carAre you planning to buy a car? If so, do be aware that, since 1 January 2013, the calculation of BPM has been based entirely on the CO2 emissions of the car or motor vehicle. In previous years, the BPM was still partly calculated on the basis of the net list price. This means that BPM will be higher than in previous years.

Driving with a foreign number plateAre you driving on the Dutch roads with a foreign number plate?Since 1 January 2014, the Dutch Customs have been subjecting the use of Dutch roads by motor vehicles with foreign number plates to closer supervision. In principle, a Dutch resident is liable to pay Motor Vehicle Tax (MRB) in addition to BPM. In order to prevent fraud and enhance supervision, an ‘assumed place of residence’ for the purposes of MRB has been introduced as of 2014.


What if you, as driver, are checked or stopped and questioned?If so, a check will be conducted as to whether you are registered or should be registered in the Persons Database (previously: Municipal Database). If that is the case, you will be regarded as a Dutch resident, and, in principle, liable to pay MRB. You will, however, be given the opportunity to prove that you are not a Dutch resident.

Excise duty


Manufacture or trade in excise duty products*Do you manufacture or trade in tobacco products?If so, bear in mind that excise duty on tobacco products (except for cigars) will increase as per 1 January 2015. For example, the excise duty on a packet of 19 cigarettes or a 40 gram packet of rolling tobacco will increase by 9 eurocents. In addition, VAT on these tobacco products will increase, because you will also have to pay VAT on the excise duty increase.

Relevant once again

Request for refund of excise duty or consumption taxAre you intending to submit a request for a refund of excise duty or consumption tax?If so, note that, since 1 July 2013, requests for refunds of excise duty or consumption tax must be made using the new digital (electronic) form.

Trade in or production of liquefied natural gas (LNG)Do you trade in or produce LNG and do you pay excise duty on this?If so, you may be eligible for a refund of the excise duty paid on LNG. This refund consists of a sum of EUR 125 per 1,000 kilograms of LNG. At present, LNG is taxed at the excise duty rate for LPG. The refund is intended to reverse the increase in the excise duty rate for LNG if it is used to power a road vehicle. To encourage the use of LNG as fuel for road traffic, provision has been made for a partial refund of excise duty paid on LNG up to and including 2018.

Levy and collection


Interest on overdue tax*Do you expect your company to distribute a dividend in 2015?If so, it is important to note that, as from 1 January 2015, the scheme regarding interest on overdue tax will also apply to dividend tax. If you do not pay your dividend tax, or pay it too late, the tax inspector may charge a minimum of 4 per cent interest on overdue tax (this percentage applies since 1 April 2014). In the event of a dividend tax refund, interest on overdue tax will be reimbursed in certain cases.

Late payment interest*Do you expect you or your company to receive a tax refund in 2015 or later? If so, it may be advisable to check whether the refund stems from European law, as is often the case as regards refunds of turnover tax. As from 1 January 2015, the law provides that - in so far as you are not already in receipt of reimbursement of interest - you are entitled to reimbursement of late payment interest at a rate of at least 4 per cent for the period from the payment to the refund (this percentage applies since 1 April 2014). You must submit a request to the Tax Authorities within six weeks of the refund.

Have you or your company received a tax refund in the last five years? If so, it may be advisable here too to check whether the refund stems from European law. Please note that a five-year limitation period applies in such a case. This means that, as regards refunds made before 1 January 2015 but no longer than five years ago, it is important to submit your request within 6 weeks of 31 December 2014. If you would prefer not to wait until 1 January 2015, you can rely on the current policy rule.

Relevant once again

Postponement in the event of payment problems Does your company expect payment problems?As regards debts of up to EUR 20,000, you may request postponement of payment for a maximum of four months by telephone. Late payment interest will remain payable.


Editorial team

Authors: mr. Judith van Arendonk-Daymr. Jeroen Bijlmr. Jogchum Buursmamr. Yvette van Gemerdenmr. Sander Geurtsdrs. Nicole Govers-de LouwAnneke Haasnoot LL.M MA mr. Pieter JansenNick Koolen MScEefje Lemmens LL.M MSc drs. Jan-Joost Mak mr. Helena NanningaWendy Toonen MScmr. Mitra Tydeman-Yousefprof. dr. Hein Vermeulendr. Frank Wergermr. Ciska WismanSandra Wolvekamp-Bloemert MSc

Editors-in-chief:mr. Jessica Litjens

Contact

Would you like to know more about these tax tips and how they apply to your situation? Please contact your PwC advisor, or:

Knowledge Centre Tax & HRSPhone: +31 (0)88 792 4351E-mail: [email protected]

The research for this publication was finalised on 23 October 2014. Any later developments have not been included.

At PwC in the Netherlands, over 4,200 people work together from 12 offices. PwC Netherlands helps organisations and individuals create the value they’re looking for. We’re a member of the PwC network of firms in 157 countries with more than 195,000 people. We’re committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.nl.

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Well prepared for 2015 - PwC€¦ · ‘Well prepared for 2015 – Tax tips for private clients and businesses’, PwC’s advisors outline the most important tax tips and points