Tax plan 2014

On Budget Day the Government’s new budget for the coming year is presented in the Netherlands. This includes the Tax Plan 2014. In the tax plan  the changes in taxation laws are mentioned which will come into effect in 2014. The plans of the government still need to be approved by parliament.  Any adjustments and changes to the plans will be placed on our site. We have extracted the following main points from the Tax plan 2014.

• Tax rates 2014
• Adjustment employment tax credit
• Annuity right exemption
• Gift tax
• Fine by intentionally incorrect provisional tax assessment
• Option ruling non-resident taxpayer
• Changes to interest on tax payable
• Adaptation energy investment deduction

Tax rates 2014
Tax rates 2014 Tax rates and social security premiums will not be corrected for inflation. `The tax rate for the first bracket will be 0,75% lowered. The third tax bracket (42 per cent rate) will be increased from 55.991 euros to 56.531 euros. For taxpayers 65 years and older, the tax brackets and social security premiums will also not be adjusted for inflation and the percentages will remain the same as in 2013. However, the second tax bracket, as well as the third tax bracket, will be changed to 33.363 euros and 55.531 respectively.

For taxpayers 65 years and older the tax brackets and social security premiums will not be adjusted with the inflation correction. The percentages for these people will also be the same as in 2013.

However the second tax bracket as well as the third tax bracket will be changed to € 33,363 and € 55,531 respectively.

Box 2 rate (substancial interest:
As from January 1, 2014 the rate for box 2 will be lowered from 25% till 22%

Adjustment tax credits
The general tax credit and the employment tax credit will be adjusted. The other tax credit will not be changed and will remain the same as in 2013

General tax credit
The general tax credit will be increased from € 2,001 to € 2,100.

Employment tax credit
The employment tax credit for 2014 will be increased from € 1,723 to € 2,097. This tax credit will also be reduced for higher incomes to nil in 2017. Higher incomes will therefore pay more tax. For 2014 the maximum tax credit for higher incomes is reduced to € 367 (was € 550).

Annuity right exemption and current severance rights
The annuity right exemption is no longer applicable from 1 January 2014. The annuity exemption can still be used up until that time.

For existing annuity rights there is a transitional arrangement. If the annuity is paid out at once instead of in installments the payment will be without revisionary interest (a kind of penalty). It does not matter if the annuity is under your company, bank or insurance company. The payment will be taxed in box 1. However for payments in 2014 only 80% of the payment will be taxed.

Gift tax with regards to main residence
As of 1 October 2013 € 100,000 may be gifted tax-free. The condition is that the gifted amount is used on a main residence (i.e. mortgage repayments, renovations etc.). The extended tax-free amount is temporary and is valid until 1 January 2015.

Earlier gifting
If you have previously made use of the old tax exemption than this will be deducted from the € 100,000.

Fine for intentionally incorrect provisional tax assessment
As of 2014 a fine can be imposed for knowingly filing an incorrect provisional tax assessment. The fine can only be imposed if the taxpayer themselves has requested a provisional refund and it must be an intentionally false application, for example claiming the mortgage interest deduction when they do not own their own home. 

Option ruling non-resident taxpayer
The current option ruling for non-resident taxpayers will be amended as of 1 January 2015.

The new ruling will apply to non-resident taxpayers who earn almost all (90% or more) of their income in the Netherlands and who deserve to be treated as domestic taxpayers.

The new ruling is as follows:

• Non-resident taxpayers who are residents of the EU, the European Economic Area (EEA), Switzerland or the BES islands and who earn 90% or more of their income in the Netherlands subject to the levying of income or wage tax, are deemed non-resident taxpayers. The qualify for the new ruling. This is no longer the choice of the non-resident taxpayer.
• By decree taxpayers who live in the EU, EEA, Switzerland or the BES islands but who do not earn more than 90% of their income in the Netherlands which is subject to the levying of income or wage tax can qualify for the new ruling.
• If the 90% requirement is fulfilled will be judged by Dutch tax standards. A non-resident taxpayer proof his non-Dutch income by  providing an income statement issued by the tax authorities of their country of residence.
• For qualifying foreign taxpayers only the Dutch income is taxed, just as with other non-resident taxpayers.
• Qualifying non-resident taxpayers are entitled to the same deductions and discounts as domestic taxpayers. If the non-resident taxpayer can utilize the same deductions in their country of residence they are not entitled to it in the Netherlands.

Changes to interest on tax payable
As of 1 January 2014 the interest rate will be adjusted. Because a transitional arrangement will apply the changed rates will be effective as of 1 April 2014.

The interest rates will be the same as the legal interest for non-commercial transactions. However there is a lower limit for all taxes (except corporate income tax) of 4%. The lower limit for corporate income tax is 8%.

Adaptation energy investment deduction
From 1 January 2014 the threshold for the Energy Investment Deduction, Environmental Investment Deduction, and Voluntary depreciation for Environmental Investments will be increased to € 2,500.

Also professional private housing landlords may be eligible for the Environmental Investment Deducation for the remediation of asbestos, or the installation of solar panels.

Source: fiscaaltotaal.nl, rendement.nl, overheid,nl, taxlive.nl, RB.nl