Tax deductions and tax schemes
Tax deductions allow you to subtract amounts from your turnover or profit. As a result, you pay less tax. Examples of deductions include business expenses, the private business ownership allowance, and the small projects investment credit. You can also get extra benefit if you invest in environmentally friendly business assets or techniques.
What are tax deductions?
If you make use of tax deductions (aftrekposten) in your income tax return, you end up paying less tax. There are different types of deductions.
Deduction of business expenses and depreciation
You can deduct certain business expenses from your turnover. Such as for work clothes, business telephone costs, and repair costs. Some costs can be deducted in one go. But if you have bought a business asset that you will use for several years, such as a laptop or car, then you usually need to spread the cost over several years. You deduct part of the costs each year. This is called depreciation or amortisation.
Both entrepreneurs for income tax purposes and those for corporate income tax purposes can deduct and depreciate business expenses.
Tax allowances
There are also tax allowances. You deduct these from profits. Such as the entrepreneur allowance, small projects investment credit (KIA), and energy investment allowance (EIA). It depends on your situation whether you can make use of these.
Schemes only for entrepreneurs for income tax purposes
Entrepreneur allowance
The entrepreneur allowance (ondernemersaftrek) is an amount that you deduct from your profit. Then you pay less tax. The allowance consists of several parts:
Do you meet the conditions for the private business ownership allowance (zelfstandigenaftrek)? For example, that you work at least 1,225 hours per year for your business. In that case, you may deduct an amount from your profit in your income tax return.
Do you spend time and money on research and development yourself? Then you may be able to reduce costs with the WBSO. You will then receive the tax deduction for research and development work via your income tax return. Do you have staff? Then WBSO reimburses part of the wage costs and expenses through the employee education and training tax rebate (Afdrachtvermindering speur- en ontwikkelingswerk) in the payroll taxes.
Does your tax partner (in Dutch) work 525 hours per year or more in your company? And do you pay them less than €5,000 or nothing at all? In that case, you may be able to make use of the co-working partner tax relief (meewerkaftrek). You deduct an amount from your profit.
Are you closing your business? And does that give you an advantage (discontinuation profit or stakingswinst)? In that case, you may be eligible for a discontinuation relief (stakingsaftrek). You then pay less tax on your discontinuation profit. Sometimes you can use part of the discontinuation profit to pay annuity premiums. You will then receive a tax-free annuity (stakingslijfrenteaftrek).
SME profit exemption
You deduct the SME profit exemption (MKB-winstvrijstelling) from your profit after the entrpreneur allowance. As a result, you pay less tax. If your company suffers a loss, the SME profit exemption reduces your tax loss. In that case, the SME profit exemption can have a negative impact on your company.
Tax schemes for starters
Are you a new business owner? You can make use of all the tax deductions and schemes available. But there are 2 special schemes for starting entrepreneurs:
The tax relief for new companies (startersaftrek) is an increase in the private business ownership allowance (zelfstandigenaftrek). Are you a starting entrepreneur and do you meet the conditions? Then you may deduct an additional amount from your profit in your income tax return. There is also a tax relief for new companies in case of occupational disability (in Dutch).
As a starter, you can determine how and when you depreciate business assets. You use the random depreciation (in Dutch: willekeurige afschrijving). This way, you can keep taxes low in your first business years. Conditions apply.
Schemes for entrepreneurs that also pay corporate income tax
The investment credit and tax reserve can be used by business owners for income tax and corporate income tax purposes.
Small projects investment credit (KIA)
Do you invest in business assets such as a computer or office furniture? Then you may be eligible for the small projects investment credit (KIA). The amount you may deduct depends on the amount invested in the financial year. View the KIA table with percentages (in Dutch) on the Belastingdienst website.
Investment deductions for sustainable business
Are you buying business equipment or techniques that are environmentally friendly? For example, insulation, heat pumps, or techniques that are more energy-efficient. Then you may be able to use these deductions. You deduct a percentage of the cost of the investment from your profit.
Do you invest in energy-saving techniques or business assets? You may be able to use the Energy Investment Allowance (Energie-investeringsaftrek, EIA).
Do you invest in environmentally friendly assets? Then you may be eligible for an environmental investment allowance (Milieu-investeringsaftrek, MIA) or the Random depreciation of environmental investments scheme (Willekeurige afschrijving voor milieu-investeringen, VAMIL).
Fiscal reserves
Fiscal reserves (in Dutch) are amounts that you set aside. You reserve them for a later moment. You may deduct these from your profit. This way, you postpone paying tax on those amounts until a later date. There are 2 main tax reserves:
If you sell a business asset, you may add the book profit to a reinvestment reserve (in Dutch). You use the reserved profit to buy a new asset.
With the equalisation reserve (in Dutch) you set aside amounts for expected high costs in the coming years. This concerns, for example, major maintenance of your business premises.