Yesterday, Sept. 16, was the day again: Budget Day! This time without the golden coach and in a different setting due to the special corona circumstances but as every year with financial news for the coming year. What will be the impact on finances for entrepreneurs?
In the Financieel Dagblad we read a nice summary back of the changes for 2021. Multinationals, large companies that do not invest, the wealthy and the self-employed will be more heavily taxed in the coming years. But start-ups and people with permanent jobs can count on tax breaks!
Finance Minister Wopke Hoekstra yesterday presented his "robust budget" for next year. Next year, the cabinet expects a budget deficit of over €43 bln, compared to €56 bln this year. An overview of the measures with impact for you as an entrepreneur:
Box 3
Increasing the exemption in box 3 (assets) to €50,000 (€100,000 for tax partners) means that "almost a million" of the three million people who currently pay capital gains tax will no longer have to do so next year. That will cost €220 mln, half of which will be covered by raising the rate, for the remaining two million wealthy, from 30% to 31%.
Self-employment deduction
The self-employment deduction will be further phased out to €3240 in 2036, where previously it was headed for €5000 in 2028.
Labor Discount
The phasing out of the self-employed deduction is offset by an increase in the work tax credit. As a result, the self-employed should not lose out on balance for the time being, while those in permanent employment will benefit more. The tax credit is additionally increased and the low tax rate is reduced to 37.1%.
Purchasing power
Purchasing power is still increasing on average despite the crisis, by 0.9%. The cabinet takes into account the first systematic pension cuts next year. As a result, retired civil servants and healthcare workers will lose an average of 1 percentage point of purchasing power. Increasing the elderly deduction and generic tax measures offer some compensation for this.
Investment Deduction
The cabinet wants to trigger targeted investments with a new tax deduction, for which €4 bln is available over the next two years. The plan, devised by employers' lobby VNO-NCW, will be paid for by companies themselves because the promised reduction in the high corporate tax rate will not materialize.
Lower win tax SME
Reduction of the low corporate tax rate from 16.5% to 15% will continue. The taxed profit ceiling goes up to €245,000 next year and €395,000 in 2022. That means €1.3 bln in tax relief for small companies with low profits in 2021 and nearly €2 bln in 2022.
Asset Deduction
Furthermore, State Secretary of Finance Hans Vijlbrief maintains his intention to make equity in business financing cheaper compared to debt. The D66'er is now aiming for an equity deduction, possibly combined with a tightened restriction on interest deductions.
CO₂ levy
Large companies will face a carbon tax. Companies that do not produce energy efficiently will have to pay for emissions of this greenhouse gas. As it stands, the new tax will rise to €125 per ton of excess CO₂ emitted in 2030. The tax only really takes effect in 2024.
Job-related investment discount
Details of the new "job-related investment tax credit (BIK)" are still being worked out. But companies that invest can offset their tax deductions through payroll taxes. This will boost employment in the Netherlands.
