Abolition of rental tax relief for workspace-in-rental-home

Not too long ago we let you in on our expectation that Eric Wiebes, the State Secretary for Finance, in response to a recent Supreme Court ruling would shortly be tabling a proposal enabling the abolition of partial tax relief in connection with workspace in the rental home. The proposal in question has since been submitted to the Lower House of the Dutch Parliament. The Supreme Court ruling in question, confirming as it did that tenancy rights can qualify as a business asset where more than ten percent of the dwelling in question is being used for business (rather than residential) purposes, had opened the door to business owners and recipients of income from other activities charging the costs associated with so-called shared accommodation (this being accommodation lacking a private entrance or sanitation of its own) forming part of a rental dwelling to their profit or gains, in marked contrast to their owner-occupant counterparts.

The essence of the proposed amendment is that it will put a stop to costs and charges of (parts of) a rental dwelling qualifying for tax deduction unless the accommodation in question is properly independent (in that it boasts a private entrance as well as sanitation of its own). This legislative “tweak” will result in business owners and recipients of income from other activities henceforth being treated equally irrespective of whether they are tenants or home owners. The savings the amendment is expected to produce are to go towards mitigating the limitation of the deductibility of hybrid expenses, from its level of 73.5% currently to 80% in future.

Dutch version: Einde aan aftrek huurkosten werkruimte ondernemer