Year-End Tips 2024: 13 Tax Tips for Private Individuals

1. Prevent unused tax losses expiration

Losses incurred in 2024 from income from employment and home ownership can only be offset against profits earned in 2021, 2022, and 2023 (carry-back), and/or future profits in the years 2025 to 2033 (carry-forward). After 2033, the possibility to off-set these losses of 2024 will expire. The possibility to off-set losses from tax year 2015 will expire by December 31, 2024. To prevent this expiration, it may be possible to increase the result by, for example, deferring costs and expenses or allowing provisions to be released. Alternatively, hidden reserves within your assets and/or activities in your business may be realized.

2. Determine a guarantee commission from your private Limited Company (B.V.)

If, as a Director and Major Shareholder (DGA), you can be set liable by a bank in private for a loan granted to your B.V., you should negotiate a commission fee for this with your B.V. After all, the bank can set you personally liable for repaying of the debt, including interest, if your B.V. is unable to do so. In that case, we recommend charging a commercial guarantee commission fee to your B.V. to prevent the Tax Authorities from correcting this (potentially even with fines). The fee for the guarantee is considered income from a privately owned asset used by your own company and is taxed as income from other activities in Box 1. The B.V. can deduct the fee as business costs. In case you will be set liable, the amount you need to pay can be taken into account – under conditions – as negative income in your Dutch income tax return.

3. Discussions regarding deemed income on primary residence

If you own a primary residence in 2024 which has a WOZ value exceeding € 1,310,000 (2023: € 1,200,000), a higher deemed income of 2.35% will be applied for the value exceeding this amount. This is  the so-called “villa tax.” This “villa tax” may be in conflict with European law.

Tip! Do you receive a definitive assessment Dutch income taxes that includes a primary residence which value exceeds € 1,310,000? In that case, we advise you to file an appeal on-time! The appeal should be received by the Tax Authorities within six weeks as of the date of the assessment.

4. Request for a tax credit for Box-2 loses

A loss in Box 2 can be offset against positive income in Box 2 from the previous year or in the six following years. When the shares  are sold and Box 2-ownership has ended with a loss, it is generally not possible to offset this loss against any dividend payments in the future. At the earliest, in the second year in which there is no longer any Box 2-ownership, you can request to convert the Box 2 loss into a so-called “tax credit.” This tax credit can be offset against the income taxes due in Box 1.

In this request, you can state the year you would like to offset the tax credit against your Box 1 tax. This can be a year for which you have not received an assessment yet, or by sending a request for a voluntary adjustment to the Dutch Tax Authorities for a previous year, not older than five years. Starting from the tax year 2024, the tax credit amounts to 24.5%.

Tip! This tax credit can only be fully used if there is sufficient income taxes owed in Box 1. It would be a pity if tax credits are lost as a result. It is also possible to request for the tax credit partially and defer the remaining entitlements to the future.

5. Reducing your (taxable) asset amount in Box 3

January 1st is the reference date for the taxation of your Box 3 assets. If the value of your assets is higher than the tax threshold amount, you will need to pay taxes on your assets. Depending on the amount and compilation of your assets, it is possible to limit or avoid Box 3 taxation. You can consider reducing your assets by making a gift or to deposit a life annuity pension before the end of this year.

Tip! Are there any debts which you can repay or reduce by using assets from the category other assets in Box 3, such as loans to 3^rd parties or shares with a low remuneration? This could result a lower calculated deemed return on investment amount, as the deemed return on investments on ‘other assets’ are higher compared to the deduction you can claim for the debts. We advise you to contact your financial advisor if this tax reduction is also beneficial from a financial point of view.

Tip! You can reduce your assets by transferring them to a B.V. (private limited company). For example, by transferring investments to a B.V. before the end of the year, the assets amount in Box 3 for the following year will be reduced, and you will pay less taxes on your assets. However, there are specific conditions which needs to be taken into account, and we refer you to our below tip regarding ‘Box hopping’: reference date arbitrage. Whether this is the best option for you depends on the expected return and the type of assets. Want to know more about the possibilities? Contact your HBK advisor.

6. Box Hopping: reference date arbitrage

Under the current Box 3 system, there are three different categories, each with its own deemed return of investment percentage: bank and savings deposits (1.03% (preliminary)), other assets (5.88%), and debts (2.47% (preliminary)). The composition of assets on January 1st plays a part in the taxation. Because each category has its own deemed yield, it can be advantageous from a tax perspective to ensure that the composition of assets is changed before the reference date. The legislator wants to prevent abuse of this, and has included the so-called reference date arbitrage in the law. With this, the legislator aims to prevent assets in Box 3 from being temporarily converted to another category to reduce the amount of taxes due.

Avoid temporary movement of assets between Box 3 (income from savings and investments) and Box 1 (employment and home ownership) and/or Box 2 (income from substantial interest). An asset that is part of Box 1 or 2 for a period of no more than three consecutive months (and both before and after is part of your Box 3) will be taken into account as a Box 3 asset, if during this period there is a reference date for Box 3 taxation. Unless you can demonstrate that you had businesslike reasons. For Box 3 assets allocated to a tax-exempt investment institution (VBI) or a foreign investment entity in which you have a substantial share interest, a reference period of eighteen months needs to be taken into account.

7. Current Box-3 debate

At this moment, not everything is clear regarding the taxation of assets in Box 3. The Dutch Supreme Court has determined, in the so-called June 6th verdicts of 2024, that the (adjusted) taxation of assets since 2017 is also not legally valid, and the assets in Box 3 needs to be taxed against the actual return on investments. Unfortunately, at the moment we do not know what the actual return on investments consists of. In the summer of 2025 the Tax Authorities will announce what will be regarded as actual return on investments and also a form declaration of actual return on investments will be made available.

Note! Do you receive a definitive assessment Dutch income taxes and you have Box 3 assets? In that case, we advise you to file an appeal on-time to preserve your rights, as there are still many uncertainties. The appeal must be received by the Tax Authorities within six weeks from the date stated on the final assessment.

Tip! Have you gathered your data on actual income and expenses for the years 2021 and onwards? If not, we recommend collecting all income and expenses related to your Box 3 assets. You will then be able to use this information to fill in your form declaration of actual return on investments in the summer of 2025. Possibly you will be entitled to a tax refund.

8. Request for a reduction by the Dutch Tax Authorities 2019

Did you receive a definitive assessment income taxes for tax year 2019 dated on or after November 12, 2021? To be eligible for legal corrections regarding the taxation of assets in Box 3 based on actual return on investments, you must have sent a request for a reduction by the Dutch Tax Authorities to the Dutch Tax Authorities on-time. This gives you the possibility to opt for the counter evidence ruling and form declaration of actual return on investments and gives you the opportunity to file an appeal in case of any future beneficial verdicts from the Dutch Supreme Court. The request for a reduction by the Dutch Tax Authorities for tax year 2019 needs to be received by the Tax Authorities before December 31, 2024. We are happy to assist you with preparing this request on your behalf.

9. Additional tax exemption in Box 3?

In Box 3 you can create an additional exemption by investing (a part of) your assets in a so called green investment fund. In 2024, the tax exemption amounts to € 71,251. This amount can doubled if you have a fiscal partner. Additionally, for a green investment fund, you receive an additional tax credit up to a maximum amount € 998 for partners.

10. Business Succession

In the case of (partial) business succession and estate planning, it may be interesting for tax purposes to gift (part of) your self-employed business or a package of shares in your private limited company (B.V.) to your future heirs or the intended business successor. The inheritance tax law provides a number of facilities for this – under certain conditions – including a conditional one. These business succession facilities (BOR) can also apply in the event of death.

The corporate structure must meet specific requirements. Indirect interests of less than 5% are no longer covered by the BOR, unless it concerns preferred shares distributed as part of phased business succession. The income tax claim can also be deferred under certain conditions (DSR). Shares which are part of your Box 3 assets qualify for the BOR, on the condition that the donor or deceased, together with his or her partner, and relatives by blood and marriage in the descending line have at least an interest 25%.

When gifting (a part of) your self-employed business, the beneficiary must have been a co-entrepreneur for at least 36 months. In the case of gifting of shares in your B.V., the beneficiary must have been employed for at least 36 months. As of 2025, this requirement will be replaced by an age limit, and the beneficiary must be at least 21 years old.

In 2024, 100% of the going concern value of the business up to € 1,325,253 is tax exempted. In 2025, the 100% tax exemption can be applied up to the amount of € 1,500,000. In 2025, for a going concern value above this amount the exceeding amount is tax exempted for 75% (in 2024, this is 83%). The reason for these adjustments is that Dutch government would like that especially smaller businesses will benefit from this Business Succession scheme.

It is possible that the BOR will be further restricted in the near future. The government has announced its intention to address and evaluated remarkable tax structures in the coming years. Is this Business Succession facility interesting for you and your heirs or business successors? Do not wait too long.

11. Allocating certain sources of incomes to your non-working partner

Since 2023, a taxpayer with low income no longer receives a (partial) tax refund based on the general tax credit, the labor tax credit, and the income-dependable combination tax credit. Partners with no income often cannot fully utilize all tax credits. This can be avoided for example by allocating dividend income to the partner with no income. This is beneficial because with this additional income, it is possible to optimize tax credits and combined fiscal partners will pay less taxes.

Another option to make full use of the tax credits of the non-working partner is to allocate (a part of the) assets of his or her partner to the Dutch income tax return of the non-working partner.

12. Have you made full use of the gift tax free amounts 2024?

Take advantage of the annual gift tax free amounts and reduce your Box 3 assets by the end of this year. If you haven’t made a gift yet, you can still make a tax-free gift up to € 6,633 to your children and € 2,658 to grandchildren or others in 2024.
Additionally, it is possible to use a one-time increased gift tax exemption, allowing you to raise the annual tax exemption for children between 18 and 40 years old. For 2024, the following amounts apply:

• Free-to-spend gift tax exemption: € 31,813
• Expensive study: €66,268

To use this one-time increased gift exemption, certain conditions must be met, such as the spending purpose, age, not having used this exemption before, and filing a gift tax return.
In your child does not meet the age condition, but his or her fiscal partner does, you as (in-law) parents may still be able to use this increased gift tax exemption for your son or daughter (in-law).

Tip! If you haven’t made a gift yet, you can still make a gift before the end of this calendar year. In case you made a gift during 2024 and would like to use the one-time increased gift tax exemption, a gift tax return needs to be submitted before March 1, 2025.

13. Purchase or sale of real estate, including your primary residence

If you have the intention to sell your primary residence soon, it can be tax advantageous to postpone the transfer of ownership after January 1, provided you have not yet bought another property for which you intend to use the income from the sale of your current home. If you sell your primary residence and transfer by a notary this year, the revenues will be in your bank account and will be considered part of your Box 3 assets in the following year. By transferring your home after new year, it will not be considered part of your assets for tax purposes as of January 1, 2025.

If you would like to buy a primary residence by using a significant amount of your own money, the opposite applies. In that case, a part of your assets in Box 3 will transferred to Box 1, making it more beneficial to transfer the primary residence by a notary before the end of this year.

Tip! Wait to transfer ownership until after January 1, if you do not own another primary residence yet to avoid a higher calculation basis for taxation of assets in Box 3.

Tip! Are you or your child between the ages of 18 and 35 year old?  Under conditions the starter tax exemption for the transfer tax on purchasing your first-time primary residence might be applicable. This exemption applies for the purchase of a primary residence with a maximum value of € 510,000 in 2024 or €525,000 in 2025. Consider whether acting now or delaying is the best option in your situation.

Disclaimer

While utmost reliability and care have been aimed for in the compilation of the Year-End Tips 2024, this version has been put together based on knowledge up to November 11, 2024. We have assumed that the Senate will approve the Tax Plan 2024 and the adopted amendments. Our organization cannot be held liable for any inaccuracies and their consequences.

More Year-End Tips 2024

For Directors/Major Shareholders (DGAs)
For the Self-Employed Entrepreneurs
For Private Individuals