This mailing is divided into the following topics:
The proposed measures will enter into force from 1-1-2021, unless otherwise stated.
Set-off of withholding taxes against corporate income tax
For corporate income tax (‘CIT’) purposes, the intention is to limit the offsetting of withholding taxes such as dividend tax and gambling tax to the corporate income tax due in one year as from 1 January 2022. The non-deductible withholding taxes can be carried forward to a later year.
Adjustment of interest deduction limitation
The interest deduction limitation that relates to base erosion in a group is adjusted in such a way that a positive balance of interest and currency gains is no longer exempted.
As from next year, the lower corporate income tax bracket will be increased in two steps from € 200.00 to € 245,000 in 2021 and € 395,000 in 2022.
The rate of the lower corporate income tax bracket will be reduced to 15%. The second rate bracket remains 25%.
Innovation box less advantageous
If companies have profits from innovative activities, they have to pay less CIT on this part of the profits. The so-called innovation box applies to these innovative profits. On 1 January 2021, the effective rate of the innovation box will rise from 7% to 9%.
Accelerated phasing out of the self-employed deduction
The previously planned phasing out of the self-employment deduction is being accelerated. In 2021 the self-employed tax deduction will drop from € 7,030 to € 6,670. Until 2028 the annual reduction is € 360, in 2028 € 390 and thereafter € 110 until 2036.
Unambiguous KIA calculation method
The method of calculating the small-scale investment allowance (KIA) is clarified for taxpayers with several companies and taxpayers who are part of a cooperative arrangement (e.g. partnerships). An entrepreneur is entitled to KIA in proportion to his investment amount in relation to the total investments of the partnership and the investments of the entrepreneur outside the partnership. From now on, the amount of the KIA per company will be determined on the basis of the investment amount per enterprise of the taxpayer.
Limitation of loss relief
By means of a letter of amendment to the Tax Plan 2021, the Cabinet will propose a time-unlimited forward loss relief as of 1 January 2022 (whereas it is now six years forward). However, the losses (both forward and backward) will only be fully deductible up to an amount of € 1 million in taxable profit. In the case of a higher profit, the losses are only deductible up to 50% of that higher taxable profit in a year.