The Tax Plan 2024 contains a large number of tax measures that directly affect director-major shareholders (dga's) and their own BVs. In cooperation with Marree & Van Uunen Tax Advisors, NOAB has prepared this memorandum, which addresses the most important measures for you as a director and major shareholder and your own BV. Please note, these are only matters specifically about dga's and their own bv. Apart from these measures, many more tax changes have been announced. In addition, measures were also announced last year that will take effect as of 2024 (or even later).
Here a major caveat applies: this memorandum is written based on the contents of the Package Tax Plan 2024, as announced on September 19, 2023. The final elaboration of the plans in the final legislation may still be different. In order to know concretely what consequences these novelties will entail, we are happy to look with you for your personal situation.
Content of this article:
1. Corporate tax rate
Profits in a BV are taxed with corporate income tax (Vpb). The Vpb rate went up on Jan. 1, 2023; this year the Vpb remains the same as last year. By the way, this is only the first time in years.
The rates are:
a low Vpb bracket of 19% on the first €200,000;
a high Vpb bracket of 25.8% on profits above that.
What this means specifically for you:
BV's will no longer pay Vpb in 2024;
if the profits of your BV fall well into the second 25.8% bracket, i.e. with profits in the BV from €200,000, you should consider whether it would not be better to divide those profits over several (new) BVs. That saves 6.8% Vpb on the profits above €200,000.
In a table:
Taxable amount | | Vpb |
From | To | |
0 | 200.000 | 19,00% |
200.000 | - | 25,80% |
2. Substantial interest rate (box 2)
If a private limited liability company pays dividends to its director and major shareholder, this is now until 2023 still taxed at a single fixed rate of 26.9% income tax in box 2. Regardless of the amount of the dividend. This, apart from the withholding tax of 15% dividend tax that the BV withholds as input tax when paying out the dividend. That withheld dividend tax is offset against box 2 tax.
The box 2 rate will change effective January 1, 2024. There will now be two brackets:
the first €67,000* gross dividend payment will be taxed at 24.5%, which effectively means a 2.4% reduction in the 2022 rate;
the excess amount paid in gross dividends will be taxed at 31%, which means a 4.1% increase in the rate.
Specifically, what does this mean for you:
if you pay a dividend that is less than €67,000, you will pay 2.4% less income tax starting in 2024. Then you may be better off postponing paying dividends until 2024;
but if you pay out a higher dividend (e.g., to finance a larger private expenditure or pay off debt with your own BV), you will actually pay 4.1% more box 2 tax. In that case, you are better off paying that larger dividend in 2023 than in 2024.
In a table:
Box 2-income | | IB |
From | To | |
0 | 67.000 | 24,50% |
67.000 | - | 31,00% |
*The first Box 2 bracket applies per taxpayer. Tax partners can therefore pay a maximum of €134,000 per year in dividends at 24.5%.
3. Combination of corporation tax and box 2 taxation
Profits earned by a BV are first taxed at 19% - 25.8% corporate income tax (rate 2024). If that net profit of the BV (read: the taxable amount of the BV after paying corporation tax) is distributed as a dividend, that dividend is then taxed once again with 24.5% - 31% box 2 levy (rate 2024).
What a dga ultimately pays in tax is called "integral levy. The amount therefore depends on two factors:
how high the profit in the BV is;
How much dividend is distributed.
From 2024, the integral levy is a minimum of 38.845% and a maximum of 48.802%.
In a table:
Taxation | Profit ≤ € 200.000 | Profit ≤ € 200.000 | Profit > € 200.000 | Profit> € 200.000 |
Box 2 rate | 24,50% | 31,00% | 24,50% | 31,00% |
Profit BV | 100,00% | 100,00% | 100,00% | 100,00% |
Vpb | -19,00% | -19,00% | 25,80% | 25,80% |
Net profit | 81,00% | 81,00% | 74,20% | 74,20% |
Box 2 tax | -19,845% | -25,110% | -18,179% | -23,002% |
Net dividend | 61,155% | 55,890% | 56,021% | 51,198% |
Integral rate of Vpb/IB | 38,845% | 44,110% | 43,979% | 48,802% |
The change in the Vpb rate and the box 2 rate in 2024 means concretely for you:
the 'integral levy' that you ultimately pay as a dga is a minimum of 38.845% and a maximum of 48.802%;
it is important to keep the profits per BV below € 200,000 and not pay out more than € 67,000 in dividends per year, then the 'integral levy' is the lowest, namely 38.845%;
spreading profits over several BVs and spreading dividend payments over several years can be lucrative.
4. Income tax rate box 1
The income tax rate in box 1 will be increased. The first bracket (for a box 1 income in 2023 up to € 73,031) will increase from 36.93% to 36.97% in 2024. Furthermore, the first bracket will be extended from € 73,031 to € 75,624. In addition, the general tax credit (AHK) and the employment tax credit (AK) will be increased.
What does this mean specifically for you:
You will owe more income tax on your DGA salary;
How much more depends entirely on your private situation. This is truly customized work with which we will be happy to help you.
In a table:
Box 1-income | | IB/PH |
From | To | |
0 | 75.624 | 36,97% |
75.624 | - | 49,50% |
Now these are the "bare" income tax rates. This does not take into account the earned income tax credit (AK), general tax credit (AHK) and income-related healthcare insurance contribution (ZVW).
If we then look at the effective marginal tax rate in box 1, also taking into account the AK, AHK and ZVW, the following table* applies:
From | To | IB/PH | AHK | AK | ZVW | Effectively |
0 | 11.803 | 36,97% | 0,00% | -8,235% | 5,320% | 34,055% |
11.803 | 24.904 | 36,97% | 0,00% | -30,698% | 5,320% | 11,592% |
24.904 | 25.498 | 36,97% | 6,652% | -30,686% | 5,320% | 18,244% |
25.498 | 39.898 | 36,97% | 6,652% | -2,618% | 5,320% | 46,324% |
39.898 | 71.624 | 36,97% | 6,652% | 6,510% | 5,320% | 55,452% |
71.624 | 75.624 | 36,97% | 6,652% | 6,510% | 0,00% | 50,132% |
75.624 | 125.198 | 49,50% | 0,00% | 6,51% | 0,00% | 56,01% |
125.198 | - | 49,50% | 0,00% | 0,00% | 0,00% | 49,50% |
As an example, suppose a dga now has a salary of €54,000 and increases it to €59,000, it will ultimately cost him 55.452% more income tax. And an increase of such a DGA salary in 2024 is not unlikely due to the table correction factor.
* The effective rate in Box 1 for the first bracket is reduced by the general tax credit of €3,374. However, this cannot be factored into the effective rate in this bracket.
5. Borrowing from your own BV
If you borrow money from your own BV, it may not exceed €700,000 as of December 31, 2023. That €700,000 amount applies to you and your tax partner together. Other family members, such as children, may also borrow €700,000 per person from your BV. Incidentally, loans for your own home do not count here. But it does include loans taken out to finance private investments (including investment property and vacation homes), children's businesses, and so on.
If you borrow more than €700,000 from your own BV, that in itself is allowed, but the excess is designated as "excessive borrowing" and then taxed with income tax as if it were a dividend distribution.
December 31, 2023 is the first reference date for this new rule. This is when the total amount you have borrowed from your BV(s) will be assessed. If it exceeds €700,000 on that date, it will cost you tax. For example, if on December 31, 2023, you have borrowed €800,000 from your own BV to finance a vacation home, you will pay 26.9% box 2 tax (rate 2023), or €26,900, on the excess above €700,000, or €100,000.
For that matter, all loans from you and your partner (whether they are loans or overdrafts) are added together. The number of BV's from which you have borrowed also makes no difference. But if you have both a debt to your own BV and a claim on your BV, it might be smart to balance the two. Then you will owe less tax.
What does that mean for you?
It is important to have a clear picture of what you have borrowed from your own BV on December 31, 2023;
if it looks like you will borrow more than € 700,000 from your BV on December 31, 2023, it is smart to see if it is possible to repay part of that amount before then, for example through a dividend distribution, or the transfer of private assets to the BV.
6. Gift deduction in the Vpb
If your BV makes a gift to an ANBI or an SBBI support foundation, for example, that gift is still tax deductible this year. From next year it will no longer be. The gift deduction was already limited to 50% of the profit with a maximum of € 100,000, from 2024 donations are no longer deductible at all.
This also applies to donations to cultural institutions. For this, an additional deduction of 50% with a maximum of € 2,500 still applies this year; as of January 1, 2024, this will also expire.
On the other hand, if you pay dividends from your BV as of next year, and you immediately deposit that money from your BV into the bank account of an ANBI or support foundation SBBI, you do not have to pay box 2 tax on that. Also, no dividend tax needs to be withheld and remitted. For this box 2 exemption to apply, two conditions must be met:
the amounts must be transferred directly by the FHa to the charity, and therefore not through the BV's bank account;
there must be no cash donations.
In that case, by the way, there is no limit to the exemption. Gifts from a BV are still deductible up to a maximum of €100,000 with a maximum of €50,000; if dividends are paid to charity, no maximum exemption applies.
For the record: costs of business expenses by companies to charities, such as through sponsorship or advertising remain deductible.
7. Random depreciation over 2023
It had already been decided earlier to stimulate economic development in the Netherlands by allowing accelerated depreciation on a number of business assets. The specific reasons were the energy crisis and the war in Ukraine.
It concerns a temporary extension of random depreciation to a maximum of 50% in the calendar year 2023. Incidentally, this relaxation applies to both IB entrepreneurs and BV's. And is completely separate from, for example, any claim to an investment deduction.
What does that mean for you in concrete terms: you can already write off 50% of the investments you make in your BV in 2023. And the rest you write off according to the normal system.
Example:
you invest €100,000 in 2023 in a machine that you would normally depreciate over five years. Assume that the residual value is € 20,000;
then in 2023 you may already depreciate (€ 100,000 -/- € 20,000) x 50% = € 40,000 instead of normally (€ 100,000 -/- € 20,000) / 5 years = € 16,000;
the other four years you may depreciate the rest, or € 10,000 per year, so that after that you have reached the residual value of € 20,000.
The advantage of this is that you have a liquidity advantage. You will pay less Vpb in 2023, but more in future years, of course. On your balance, it makes no difference in terms of total depreciation costs, you only bring them forward.
However, you may only write off at random if you meet a number of conditions:
it only applies to new business assets, not used ones;
you must have made the investment commitment in 2023;
The investment must be in use before January 1, 2026.
The facility does not apply to all investments. Some are excluded, such as investments in buildings, ships and some passenger cars. Business assets that are intended to be primarily made available to others are also excluded.
What this mean for you:
for certain investments, it may be smart to make them this year (2023);
do not hesitate to ask us to check if the random depreciation is applicable to an investment you plan to make.
8. Business succession plan
As a director and principal shareholder, you can transfer some or all of the shares in your own private limited company to someone else under very favorable tax conditions. If this is a gift, little or no gift tax is payable under the so-called Business Succession Regulations (BOR), and it is also possible to pass on box 2 tax to the donee via the so-called 'DoorSchuifRegelingen' (DSR).
In the coming years (as of 2024), the BOR and DSR will be tightened on a large number of points and expanded on a number of points. For example, the exemption amounts of the BOR will change. Sometimes it is advantageous to bring forward a business succession (for example, in the case of a gift as of 2025, the BOR is only permitted if the transferee is at least 21 years old), and sometimes it is advantageous from a tax perspective to wait (because, for example, less stringent requirements are imposed on the ownership period of the business). At least, if your planning allows it. It goes without saying that you should never be guided by tax rules alone. You determine your own pace of march. Only if you do plan to transfer your business is it smart to think carefully about the timing of the transfer.
What does this mean for you:
it may be that bringing forward or delaying a business succession can be fiscally favorable;
Check with us in which year is most favorable in your specific situation to carry out a business succession from a tax perspective.
9. Other measures
In addition to the above measures, a number of tax issues are going to change, which may be important for you as a dga with your own BV.
a. Energy Investment Allowance (EIA).
The EIA will be reduced from 45.5% this year to 40% in 2024. The scheme cost the government more money than the budget was. An investment cap was also originally going to be introduced, but that is not going to happen.
b. Tax-exempt travel allowance
The tax-exempt travel allowance for business mileage and commuting will be increased. Currently it is €0.21 per kilometer (2023), but will be increased to €0.23 from next year.
Thereby it does not matter how the employee travels: by car, by bicycle or on foot.
c. Broadening of the exemption for public transport cards
If you give an employee a public transport card, the private use that the employee can achieve with it will count as a targeted exemption in the WKR as of next year. Regardless of whether you provide the card to the employee, give it to him or her, or compensate him or her for it.
However, the requirement is that the employee uses the public transport card to any extent for business travel (which includes commuting). This saves administrative inconvenience.
As a result, you no longer have to keep records of how much the employee uses the OV card for private and business travel.
d. Free space WKR
For this year only, the free space has been expanded once to 3% over the first € 400,000 taxable wage bill. As of 2024, the free margin over the first € 400,000 will be 1.92% again. Over the amount above € 400,000 the free margin is and remains 1.18%.
Do not forget to use this free space for you and your staff.
e. Annuity margin
You may deduct more annuity premiums from January 1, 2023 (note: 2023!), or deposit money in a blocked bank savings account. In tax planning, this can be very beneficial. For example, the annual margin for 2023 has increased to a maximum of €34,550 and the reserve margin has been extended to ten years instead of seven years.
Especially for you as a director and principal shareholder, this can be important because you have not been allowed to build up pension entitlements under your own management for a number of years.
f. Other changes
But more changes have been announced that don't affect you as a DGA as much, but are still important enough to mention:
up to and including 2023, you received a payment discount if you paid a provisional income tax assessment in a lump sum. That payment discount will be eliminated starting in 2024;
agricultural goods and services will no longer be subject to the low 9% VAT rate as of 2024, but to the general 21% rate;
in the box 3 taxation, even more ambiguities and uncertainties have arisen. There is a high probability that the Supreme Court will consider the restoration of rights that applies for the period through 2026 to be in violation of the ECHR. This chance has increased due to an opinion of the Advocate General to the Supreme Court. It is very important that, as soon as you receive an assessment containing a box 3 assessment, you discuss this with us. Perhaps that assessment for the box 3 portion is unlawful and we can act accordingly;
the Future Pensions Act (WTP) came into effect on July 1, 2023. We recommend that you consult with your pension advisor about this, as there is a good chance that you will need to adjust your pension plans before 2028;
although the gift exemption for private homes has already been discontinued as of January 1, 2023, you are still able to supplement a gift from 2022 tax-free up to a maximum of € 106,671 this year (2023!) under the transitional rules. If so, that money must have been spent by the recipient on their own home before January 1, 2025.
In conclusion on Prinsjesdag 2023 for DGA and BVs
This brief outlines the main changes announced on Prinsjesdag 2023 for DGAs. In order to know the specific implications of these novelties on your personal situation, don't hesitate to contact us, so we can look together to optimize your fiscal situation.
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