We are now late in the calendar year. Time to start to round off the current financial year tax wise. Some year-end administrative corrections are in place, what are those?
Year end administrative corrections
The year-end administrative corrections can be about:
- Company car: Private use percentage for the income tax
- Company car: Private use percentage for Value Added Tax
- Have investments been allocated correctly
- VAT correction on canteen costs
Company car year end administrative corrections
The company car is also used for private travel. If that is not the case, you should have kept a log book. Every single KM driven with the car needs to be accounted for. This is to proof you travelled privately less than 500 km annually.
Assuming you did not keep such a log book, you need to add to your taxable income 22% of the Dutch catalogue value. However, if your company car was purchased before 2017, 25% of the Dutch catalogue value is added to the income. Then again when you have a full electric car purchased this year (2020) the percentage is 8%. Was 4% last year and is 12% next year. In short, pay attention to the correct percentage.
The costs the company pay for the company car, are also used for the private travel distance. To equally reduce this Value Added Tax deduction, in the VAT return 2.7% of the Dutch catalogue value of the car is added. That is for both the car driven by the owner of the company, but also of all his employees. Only if the company car is older than 5 years, this percentage is 1.5%.
Investments in the Netherlands are costs for goods exceeding EUR 450 ex VAT. That implies when a scanner, desk or table is purchased in the name of the company exceeding EUR 450 ex VAT, it is an investment. Not an investments is a software subscription or subcontractor costs exceeding EUR 450 ex VAT.
An investment implies it needs to be activated on the balance and can be depreciated over a 5 year period. You cannot depreciate over the value to be expect at the end of 5 years. A laptop with an average life span of 3 years you can fully depreciate. A company car will have a value after 5 years, you need to determine this rest value as good as you can. Over the difference between purchase price and rest value you can depreciate.
Then the total of the investments exceed EUR 2.400 in a calendar year, the possibility of an extra 28% investment tax credit can be in place.
VAT correction on canteen costs
The costs for food and beverages in the office contain VAT. The food and beverages for the sole purpose of client entertainment in the office you can deduct. The food and beverages for the employees to consume imply that this is in fact a remuneration in kind from the employer. Hence not all the VAT can be deducted, but a pro portion of the VAT. That pro portion is to be calculated based on the number of employees and the threshold amount per employee under which no correction is required.
This sounds a silly correction and maybe it is, but the VAT department of the Dutch tax office does not have a silly approach. It is taken very serious and corrections and penalties can be issued very much not to your liking.
Year end is coming
January can always be a hectic month in the new year, with all the obligations set fresh again. But in January you need to file the correct VAT return and correct wage tax return. To avoid you getting a bit stressed out over these topics, maybe now is already a good moment to address theses issues.
We think tax-is-exciting and the exciting part of the above issue is that we are not obsolete yet. An expert is best to address these issues and we happen to have them in the office. Feel free to contact us to have us assist you.
Sorry for the dashes in the middle of the word tax-is-exciting. Apparently Google has a dirty mind and sees only a three letter word that we refer to when we practice to reproduce ourselves. Anything related to that word is spam, hence this devout solution.