Prinsjesdag and the tax plans for eenmanszaak, vof, maatschap, cv

On Prinsjesdag 2023 (Budget Day in the Netherlands), the Dutch government announced many plans for 2024 that will affect your eenmanszaak, vof, maatschap, or cv. Under the proposed 2024 plans, working and retired people pay less tax so hold onto more of their money. People on lower incomes will also benefit more than those on higher incomes.

For more English updates about Budget Day in the Netherlands, check the Prinsjesdag homepage.

Rules and regulations for businesses in the Netherlands

Check Business.gov.nl for a list of all the government plans announced on Prinsjesdag that will impact businesses.

If you have an eenmanszaak (sole proprietorship), vof (general partnership), maatschap (professional partnership), or cv (limited partnership) in the Netherlands, your legal structure does not have legal personality. This means you have to file an income tax retun and pay income tax over your personal income. This is done in 3 boxes:

• Box 1: income from employment, benefits, home ownership
• Box 2: income from share ownership
• Box 3: income from savings, investments

There are changes coming for each of these.

After you have calculated the tax in the 3 boxes, amounts will be deducted. Depending on your situation, you may be eligible for tax credits, entrepreneur allowance, and the SME profit exemption. The amount remaining is the tax you must pay for that year.

Box 1: Income from employment, benefits, home ownership

Your income in box 1 is taxed in 2 brackets. In 2024, you will pay 36.97% tax on your income up to €75,624. That is 0.04% more than in 2023. On your income above €75,624, you will pay 49.5% income tax next year. That is the same as in 2023.

A modified first bracket applies to those who receive an old age pension (AOW).

In other years, the amount of the bracket limits went up based on the inflation rate. This year, the increase is 3.55%. This is less than the inflation rate of 9.9%. You are more likely to pay the higher rate of the second bracket as a result.

Box 2: Share ownership income

If you own 5% or more of the shares in a company, you have a substantial interest (‘aanmerkelijk belang’). You may then receive profit distribution or a dividend. In 2023, you pay 26.9% tax on this. In 2024, dividends received from substantial interest will be taxed in a two-tier system. On income up to €67,000, you pay 24.5% tax. On everything above that, the rate is 31%.

In 2024, you will pay less tax in box 2 on profit distributions up to about €106,000. On higher profit distributions, you will pay more tax in 2024 than in 2023. It may be interesting for you to distribute accumulated profits in your company in 2023. Consult with your financial adviser.

Note: after a dividend distribution, the money and investments are private. That capital falls in box 3. There is a tax-free capital of €57,000 in box 3. If the amount exceeds this exemption, you pay tax in box 3 on this. Talk to your adviser about what is best for your situation.

Box 3: Income from savings, investments

Do you have savings or investments? In 2024, you will pay no tax on your assets up to €57,000. Do you have more capital? Then you will pay 34% tax on the return you made on it. The return is the yield, the profit you make on your savings and investments. In 2024, the government calculates a fixed return percentage for investments of 6.04%. The return on savings will be determined later. With retroactive effect to 1 January 2023, money in third-party accounts with a civil-law notary or bailiff will also count as savings. The same applies to homeowners' shares in the assets of a homeowners' association (VvE).

Debts also fall into box 3. The cost of your debts is deducted from the proceeds of your assets. The cost of your debts is charged at a fixed interest rate. There is a fixed amount that you cannot deduct from your debts. This is the debt threshold. The debt threshold and interest rate will be determined later.

You do not have to declare mutual claims and debts between tax partners or between parent and minor child from 2024.

Payment discounts abolished

Did you always pay a provisional income tax assessment in full before the first payment deadline? Then you would receive a payment discount. From 2024, the government will abolish this payment discount. So, you will no longer get a discount.

Changes to the entrepreneur allowance

SME profit exemption to go down

The SME profit exemption reduces your taxable profit after the entrepreneur allowance. The rate drops from 14% to 12.7% in 2024. Entrepreneurs with high profits will lose the most as a result.

Private business ownership allowance ('zelfstandigenaftrek')

Do you work at least 1,225 hours in your business? Then you are able to use the private business ownership allowance ('zelfstandigenaftrek'). The private business ownership allowance goes down by €1,280 in 2024. The private business ownership allowance will then be €3,750. Over the next few years, the private business ownership allowance will go down further. Eventually to €900 in 2027.

Tax-free travel allowance increases

The tax-free travel allowance will increase from 21 to 23 cents in 2024. As an entrepreneur, you may deduct this amount from the profit for business trips with your private car, motorbike, or bicycle. As an employer, you may also give your staff a tax-free allowance of 23 cents per kilometre. This applies to commuting from home to the workplace, and other business kilometres using their own means of transport.

A company car or private car. Find out which is more interesting for you?

Limit on depreciation of buildings

Do you own a business premises? If so, you were allowed to depreciate (write off) up to 50% of the Valuation of Immovable Property Act (‘waardering onroerende zaken’, WOZ) value until 2024. This means you can deduct the costs of your building from your income tax. You receive the WOZ value every year from your municipality via the municipal tax assessment. From 2024 onwards, you can only write off up to 100% of the WOZ value. A lower or no depreciation amount will increase your annual profit. You pay more tax as a result.

Income-related healthcare insurance contribution

As an employer, you pay a contribution to your employees’ healthcare insurance, based on their salary. This is set out in the Healthcare Insurance Act ('Zorgverzekeringswet', Zvw). In 2024, the maximum contribution per employee is 6.57%, up to a maximum of €71,624. In 2023, the contribution was 6.68%, up to a maximum of €66,952. You pay the income-related healthcare insurance contribution for your employees as part of the payroll tax.

As a business owner, you pay the income-related healthcare insurance contribution for yourself. This is based on your business income. For this, the rate goes down to 5.32% in 2024. This applies up to a maximum income of €71,624. The rate in 2023 was 5.43%.

You receive the (provisional) assessment for the income-related healthcare insurance contribution at the same time as the (provisional) tax assessment.

Reinvestment reserve for the partial ending of a business

Do you end part of your business due to government intervention? For example, through the buy-out scheme for agricultural entrepreneurs? Then you might get rid of a business asset you no longer use. If you sell something for more than its book value, you make a profit. From 2024, you may use that amount as a 'reinvestment reserve'. You will not pay tax on it. You must spend the amount of the reinvestment reserve in the year of sale, or in one of the next 3 years. And it must be spent on one or more business assets for the company you continue with. Do you end up not using the amount at all? Then it does count as profit and you still pay tax on it.

Business succession scheme scaled down and simplified

When inheriting or being given a business, you get tax exemptions if you use the Business Succession Scheme (BOR). The government wants to take the first step towards simplifying and scaling down that scheme in 2024.

Thanks to the BOR, you get tax exemptions on your business assets when you are given or inherit a business. If you have leased immovable property to third parties, it will fall under investment assets by default from next year. As a result, it can no longer fall under the BOR.

The BOR will be further restricted in 2025. Business assets of more than €100,000 that you use partly privately may then no longer be counted as business assets. The exemption to consider 5% of investment assets as business assets will also expire that year.

The 100% tax exemption through the BOR will increase from around €1.2 to €1.5 million in 2025. The exemption for the amount above this €1.5 million falls from 83% to 70%.

In addition to the BOR, you can also use the Transfer Scheme (doorschuifregeling, DSR) when you inherit or receive. Then the donor or testator (the deceased who leaves the inheritance) pays no income tax. The tax claim passes to the receiver.

The government also wants to amend the DSR. Currently, it only applies if the receiver has been employed by the company for 36 months at the time of receiving the company. With effect from 2025, this requirement will disappear. Both the BOR and the DSR will then require the receiver to be at least 21 years old.

Allowances

Healthcare benefit lower

In 2024, the maximum healthcare benefit ('zorgtoeslag') for singles will be €127 per month. For families, it will be €243. These amounts are lower than the healthcare benefit in 2023, after this allowance was temporarily increased. The healthcare allowance is subject to a maximum income and capital limit. These amounts will be announced at the end of November 2023. You can apply for healthcare benefit from the Dutch Tax and Customs Administration (dienst toeslagen, in Dutch) until 1 September of the following calendar year.

Increase in housing benefit

Do you rent a house? The housing benefit ('huurtoeslag') will increase by a maximum of €416 per year in 2024. You must apply for the rent allowance before 1 September of the following calendar year from the Dutch Tax and Customs Administration (dienst toeslagen, in Dutch).

Supplementary child budget

Do you have a child younger than 18? Depending on your income, you may be entitled to a supplementary child budget ('kindgebonden budget'). This is a monthly contribution for families in addition to the child benefit ('kinderbijslag'). This allowance increases by a maximum of €750 for your first child, and a maximum of €883 for each additional child. For children between 12 and 17, the maximum increase is €400.

In principle, you receive the child budget automatically from the Dutch Tax and Customs Administration (dienst toeslagen, in Dutch). Did you not receive an allowance before? Apply for the child budget yourself before 1 September of the following calendar year with the dienst toeslagen (in Dutch).

Check via BerekenUwRecht (in Dutch) if you qualify for benefits.

Temporary energy emergency fund

Are you unable to pay your energy bill? If so, you can make use of the Temporary Energy Emergency Fund (Tijdelijk Noodfonds Energie, in Dutch) until April 2024.

The Energy Investment Allowance will be reduced

If you invest in energy-saving and sustainable business assets, you may be eligible for the Energy Investment Allowance (EIA). This allows you to deduct a percentage of the cost of your investment from your profit. As a result, you pay less tax.

The EIA for entrepreneurs will be extended by 5 years, until 2028. However, the percentage you are able to deduct goes down from 45.5% to 40% in 2024. The minimum investment is €2,500, and the maximum investment is €136 million.

The amount you can deduct will go down every year. Do you have a big business investment planned? It may be wise to do this in 2023. That means you can benefit from the deduction of 45.5% of the cost of the investment.

Please note: it is not yet certain when exactly the amendments to the law will take effect

A legislative amendment or bill is subject to its passing through the upper and lower houses of parliament, or proclamation of the Order in Council (Algemene Maatregel van Bestuur, AMvB) or ministerial decree and publication in the Staatsblad or Staatscourant (Government Gazette, in Dutch). This means that the dates or information mentioned in this article may still change.