End-of-Year Tax Tips for 2024
For Entrepreneurs
1. Keep a Time Log
As a freelancer or business owner, you may qualify for tax benefits like the self-employed deduction (zelfstandigenaftrek). To claim this, you must dedicate at least 1,225 hours to your business annually and be able to prove it.
• Action Point: Use a digital or manual logbook to keep detailed records of your hours, including tasks and activities.
2. Check WOZ Assessments for Business Properties
Starting in 2024, you can only depreciate properties you use personally down to the WOZ value. The previous rule allowed depreciation to 50% of the WOZ value.
• Action Point: Verify your WOZ assessments and challenge any discrepancies before the deadline to optimize your depreciation allowances.
3. Stay Compliant with Wet DBA
The Wet DBA governs the relationship between freelancers and their clients to determine whether work should be classified as freelance or employment. Misclassification risks fines and reclassification.
• Action Point: Review your contracts and client agreements for compliance.
You can read more about this (unfortunately only available in Dutch) in the White Paper of We Know People and also watch the webinar we (Dutchtadvice) did with them here.
4. Prepare for the Reduction in MKB-Winstvrijstelling
The MKB-winstvrijstelling for small and medium-sized enterprises will decrease in 2025 to 12,7% (it was 13,31% in 2024). This tax benefit allows a percentage of your profit to be deducted.
• Action Point: Review how the reduction in the MKB-winstvrijstelling will impact your taxable profit for 2025.
5. (For Majority Shareholders) Reduction in Top Rate for Box 2
Since January 1, 2024, Box 2 now has two tax brackets for dividends. A lower rate applies to dividends up to a specific threshold, while a higher rate applies above that amount. Planned changes for 2025 include a reduction in the top bracket rate.
• Action Point: Plan dividend distributions strategically to benefit from lower rates in Box 2. Also, consider the impact of dividends on your general tax credits, as these are income-dependent.
For Individuals
6. The Everchanging 30%-Ruling
Recent changes and upcoming adjustments to the 30%-ruling will impact salary caps, tax benefits, and eligibility requirements for both employers and employees.
• Action Point: Stay informed about the changes and consult with us to understand how these updates may affect your financial or employment arrangements.
POINT OF ATTENTION
For some, the partial non-tax resident benefit of the 30% ruling will no longer be valid from tax year 2025. Please read our brief article regarding the 30% ruling changes for more information.
7. Maximize Tax-Free Green Investments
The tax system allows a Box 3 exemption for certified green investments in 2024. This reduces your wealth tax while supporting environmentally sustainable projects.
• Action Point: Consider whether green investments fit your financial strategy. For existing investments, ensure they are classified correctly in your tax return.
8. Declare Cryptocurrency Holdings
Cryptocurrencies must be reported in Box 3 of your tax return at their market value on January 1 of the tax year. Failure to report may lead to significant penalties, especially with stricter EU reporting rules from 2025 of crypto currency portals. You can read more about this here (link to our new blog about DAC 8).
• Action Point: Evaluate your crypto portfolio’s value on January 1, 2024. If you’ve missed past disclosures, voluntary correction (“inkeren”) can minimize penalties.
9. Make Tax-Advantaged Gifts Before January 1, 2025
Gifting to children, charities, or others before year-end can reduce future inheritance taxes and your taxable wealth in Box 3. However, recipients could be taxed on this themselves in Box 3.
• Action Point: Use annual exemptions for tax-free gifts, such as:
- o €6,633 for children
- o €2,658 for grandchildren or others
10. Use the One-Time Increased Gift Exemption for Children
Under specific conditions, parents can make one-time tax-free gifts to children aged 18–40 for purposes such as education or home purchases. These exemptions replace annual gift allowances.
• Action Point: Plan significant gifts strategically to take advantage of one-time exemptions. Ensure the recipient meets the qualifying criteria.
11. Understand Adjustments to the Leegwaarderatio (vacant possession ratio/empty home value)
Since January 1, 2023, the leegwaarderatio (used for discounting the value of rented properties) no longer applies to temporary rental agreements or rentals to related parties. Also the positive impact of the leegwaarderatio is lowered as compared to earlier years, and in some situations it does not apply anymore (depending on the ratio of the annual rent to the WOZ value).
• Action Point: Review the implications of these changes on your rented properties and adjust your financial planning accordingly.
12. Report Temporary Home Rentals
If you temporarily rent out your primary residence, 70% of the rental income must be declared in Box 1 unless a specific exemption applies. Temporary rental does not affect your mortgage interest deduction unless the property is for sale.
• Action Point: Deduct rental-related expenses from your taxable income. Check local regulations, VAT obligations, and insurance requirements for temporary rentals.
13. Utilize Moving Arrangements for Your Primary Residence
If you have a vacant home intended for sale or are in the process of moving into a newly purchased or constructed home, you may still qualify for the mortgage interest deduction under the moving arrangements. Renting out the property, however, could affect this benefit.
• Action Point: Assess whether your situation qualifies under the moving arrangements to maintain your mortgage interest deduction. Avoid rentals that reclassify the property as Box 3 wealth.
14. Optimize Wealth Allocation Between Partners
Fiscal partners can divide their Box 3 wealth to minimize tax burdens by leveraging each partner’s tax-free threshold.
• Action Point: Analyse the distribution of your combined assets with a tax advisor to achieve the most favourable tax outcome.
15. The Dutch Box 3/Wealth Tax and Recent Developments
The Box 3 tax system has undergone significant changes, introducing distinctions between returns on different types of assets. Please also see our article about Box 3 here.
• Action Point: Review your taxable assets and consider whether the deemed or actual returns calculation benefits you more. Keep your documentation ready for any recalculations.
POINT OF ATTENTION
For some, the partial non-tax resident benefit of the 30% ruling will no longer be valid as from 2025. Please read point 6 regarding the 30% ruling and follow the link under it for full information.
16. Council of State Criticizes Box 3 Tax Reform Proposal
Proposed reforms to the Box 3 tax system aim to tax actual returns but could significantly increase administrative complexity. Please also see our article about box 3 here.
• Action Point: Monitor developments and seek advice to understand how these reforms might affect your tax situation.
17. Check Your Eligibility for IACK (Income-Dependent Combination Tax Credit)
The IACK is available to co-parents without a fiscal partner or with a higher-earning partner. However, recent changes may affect your eligibility, particularly for those living abroad and working in the Netherlands. The IACK will be phased out gradually starting in 2027.
• Action Point: Verify your eligibility for IACK and plan for its gradual reduction. Seek advice if your situation involves cross-border taxation.
18. Claim Dividend Tax Refunds as a Non-Resident
Non-resident individuals receiving Dutch dividends may be entitled to a refund if Dutch withholding tax exceeds the tax rate applicable to residents. Tax-resident individuals in the Netherlands may also qualify for a refund if the foreign dividend tax withheld exceeds the maximum rate specified in the applicable double taxation treaty.
• Action Point: Check if you are eligible for a refund and file a claim for any excess taxes paid.
For information or assistance, please see the link to one of our Group Companies called Tax Reclaim BV.
19. Avoid Arbitrage Risks in Box 3 Wealth
Asset restructuring around the January 1 valuation date, such as shifting assets between categories (bank accounts and other investments that attract a higher fictitious income that is taxable in Box 3), could be treated as arbitrage and ignored by tax authorities if done within a three-month window of the valuation date.
• Action Point: Ensure that asset transactions are outside the arbitrage window to avoid reclassification risks. Please reach out to us for clarity on timing and impact for you.
For Companies
20. Utilize the Work-Related Costs Scheme (WKR)
The WKR allows employers to provide tax-free benefits to employees. Unused allowances cannot be carried forward.
• Action Point: Review 2024 expenses to ensure all benefits are reported and allocated correctly under the WKR. Use this as an opportunity to plan for 2025.
21. Review Employee Compensation and Tax Reporting
Ensure all reimbursements and allowances provided to employees in 2024 are correctly processed for tax purposes, so also, for example, if the 30% ruling has been applied correctly. Misclassification can lead to unexpected liabilities.
• Action Point: Conduct a year-end audit of employee compensation and the 30% ruling. Adjust records and processes as necessary for compliance in 2025.
22. Reporting Payments Made to Third Parties (UBD)
The Dutch tax authorities have shared an information letter regarding sharing certain information with them before 1st of February 2025:
If you paid individuals who are not your employees in 2024 for work or services- or provided them with non-monetary compensation—these payments or rewards, referred to as “payments made to third parties,” must be reported to the tax authorities by February 1, 2025.
• Action Point: Please check whether you have made such payments in 2024 and also read more about the requirements in the link below. Please read our brief blog that goes a bit deeper into this subject.
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