Year-End Tips 2022: 11 Tips for Private Individuals
During the dark days of December it is worthwhile to check what tax-related steps you need to take before the end of the year or what would be better to postpone until the new year. We have listed the up-to-date tips for you.
1. Averaging 2020-2022
If your annual income fluctuates strongly within 3 years, it is possible, under certain conditions, to average your taxable incomes in box 1 (work and home) from 2020 to 2022, so that you may pay less tax in total over these years. Note: the years to be averaged may only be included once in the averaging calculation. It must be assessed which of the years to be averaged will yield the highest possible tax refund. You may also be able to fund previous years, depending on the date of the final income tax assessments for the relevant years. Please note: according to the 2023 Tax Plan, the averaging scheme will be scrapped as of 1 January 2023, the last period over which averaging will then be possible is 2022-2024. Entrepreneurs in particular will be disadvantaged by this.
2. Transfer tax
Due to a measure in the 2023 Tax Plan, the general transfer tax rate will increase from 8% to 10.4% with effect from 1 January 2023. As a result, all acquisitions other than homes intended for owner-occupation will be taxed more heavily from 2023, keep this in mind. Purchasing real estate (other than an owner-occupied home) in 2022 can easily save thousands of euros!
3. Tax losses expire
A loss from work and home suffered in 2022 can only be set off against profits made in 2019, 2020 and 2021 (carry-back) and profits made in the years 2023 until 2031 (carry-forward). After that, these losses are lost. Losses from 2013 will expire by December 31, 2022. To prevent this, the result may perhaps be increased by, for example, postponing costs and charges or releasing provisions. Or perhaps hidden reserves embedded in your assets and/or activities can be realised.
4. No further allocation to FOR possible after 2022
Due to a measure in the 2023 Tax Plan, the fiscal retirement reserve (FOR) will be phased out from 2023. It is then no longer possible to allocate annually.
5. Guarantee commission at B.V.
As a DGA, do you stand as a private guarantor for a loan issued to your B.V. by the bank? In that case, you must stipulate compensation for this from your B.V. After all, the bank can address you privately to pay the debt, including interest, if the B.V. is unable to do this. In that case, we recommend that you arrange a business surety commission with your B.V. to prevent the tax authorities from correcting this (possibly even with fines). The fee for the suretyship is regarded as a benefit under the posting scheme and taxed as a result from other activities in box 1. The B.V. can deduct the fee.
6. Business Succession
In the case of (partial) business succession and estate planning, it may be interesting for tax purposes to gift (part of) your proprietorship or a package of shares in your B.V. to your future heirs or to the intended business successor. The Inheritance Act provides a number of facilities for this, under certain conditions, including a conditional exemption of more than 83% of the qualifying business assets (in some cases even rising to 100%) and a ten-year (interest-bearing) deferral of tax payment. These business succession facilities (in Dutch: BOR) may also apply in the event of death. However, the corporate structure must meet specific requirements. Indirect interests of less than 5% no longer fall under the BOR as such. The income tax claim can also be rolled over under certain conditions (in Dutch: DSR). When donating (part of) your proprietorship company, the beneficiary must, in principle, have been a co-entrepreneur for 36 months and when donating the shares in your B.V. the beneficiary must, in principle, have been employed for 36 months.
It is not inconceivable that the BOR will be reduced in the near future. The government has announced that it will commit itself in the coming years to tackling remarkable tax constructions and negatively evaluated tax schemes. This will include looking at rented real estate in the BOR. At the end of 2022 or in the first half of 2023, the government will issue a government response to the evaluation of the BOR and the DSR.
7. Dividends to your non-working partner
Partners who have no income cannot use all tax credits. When paying dividends, it is possible to allocate this to your partner without income. Convenient, because with this extra income it is possible to make better use of the tax credits.
8. Box shopping
Prevent temporary shifts in assets between box 3 (savings and investments) and box 1 (work and home) or box 2 (substantial interest). An asset that is part of box 1 or 2 (and both before and after that of box 3) for a period of no more than three consecutive months is also taken into account in box 3 if a reference date for box 3 lies in that period. The same applies in the first instance for a period of four to six months, except when you can prove that you acted for business reasons. A period of eighteen months is even maintained for box 3 capital that is placed in an exempt collective investment scheme (in Dutch: vbi) or a foreign investment body in which one has a substantial interest.
From 2023, with a view to the changed tax system in box 3, capital shifts can also be tackled within this box. The Bridging Act box 3 provides for an anti-abuse provision against reference date arbitrage that ensures that the temporary conversion of assets in box 3 cannot lead to lower taxation. For example, converting investments into lower-taxed savings balances just before the reference date, whereby the savings are converted back into investments shortly after the reference date. An arbitration period of three months has been chosen, so that transactions after 1 October 2022 can be included for the first time. Transactions within the arbitration period must be substantiated upon request for business considerations.
9. Extra exemption in box 3?
In box 3 you can create an extra exemption, namely by investing (part of) your assets in green funds. In 2022, this exemption amounts to € 61,215. This can even amount to a maximum of € 122,430 if you have a tax partner. In addition, you will receive an additional tax credit for green investments that can amount to a maximum of € 858 with partners.
10. Request for reduction of box 3 levy not necessary
It is possible that the return on your assets in box 3 in the years 2017 to 2020 was lower than the notional return on which the levy in box 3 is based. If the assessments for these years have now been finalized and you have not objected to the levy in box 3, there is still a (small) chance that you will be refunded tax in box 3. Normally, this is done by means of a official request for a reduction to the Tax Authorities. After a rejection by the Tax Authorities, a court procedure is then open. It has recently become clear that ultimately only one or a few cases (in test proceedings) will be submitted to the court, and that the other non-objectors for the years 2017 to 2020 can also claim the outcome of these test proceedings without request. No further action is required for this.
11. Gift Exemption
In 2022, gifts from parents to children are exempted from gift tax up to the following amounts:
Child between 18 and 40 year (onetime) optionally and subject to conditions:
€ 56. 724
For a private home
You are eligible for the one-time increased exemption if the conditions set are met and if the exemption is invoked in the gift tax return (and you have not previously invoked this exemption, subject to transitional law). If the child does not meet the age requirement, but his partner does, you as parents (in-law) may also be able to take advantage of the increased exemption. The gift tax return for gifts in the 2022 calendar year must be submitted before March 1, 2023. Please note that due to a measure in the 2023 Tax Plan, the gift exemption for the owner-occupied home will be reduced with effect from 1 January 2023 to the amount of the one- time increased exemption for the gift at leisure (€ 28,947 in 2023) and with effect from 1 January 2024 will be abolished, see also point 12 in the next section.