Certain changes planned by the Cabinet still require parliamentary approval.
1. Take tax reductions and restrictions on deductions into consideration
As of 2019 the income tax rates will be lowered, as also planned for the following year. Most deductible items can be deducted at a lower rate in the years ahead. Next year, the corporate income tax rate for the first € 200.000 of profit will fall from 20% to 19%. Consult your tax advisor to decide if it is therefore lucrative for you to postpone confirming your revenue and to increase your costs. It might also be wise for you to pay deductions on items such as donations and healthcare already this year, where possible.
2. Use your remaining allowance for 2018
Make full use of your remaining allocation of 1.2% in the labor costs scheme. You can still use any remaining allowance for Christmas gifts, bonuses or to organize a staff Christmas Party. Remember that the tax authorities generally accept expenditure of up to € 2,400 per employee.
3. Lower rate of VAT? Invoice in advance!
The lower VAT rate will be raised from 6% to 9% as of January 1st, 2019. Goods that have already been invoiced and services that will be provided in 2019 will not be charged at the increased rate. If you deliver goods and services that are covered by the lower VAT rate you can make use of this by invoicing before the end of this year.
4. Plan your investment allowance
Maximize your investment allowance with effective planning of your investments. For larger sums, the investment allowance decreases as the amount of your investment increases. For example, an investment of € 100.000 in 2018 delivers a small-scale investment allowance of € 15.863. If you spread this investment over 2018 and 2019 by investing € 50.000 each year, this will deliver a small-scale investment allowance of € 28.000.
5. Invest in energy saving before the end of the year
Energy saving investments can be eligible for the Energy Saving Allowance. This amounts to 54.5% this year, reducing to 45% next year. This is a good reason to make energy saving investments before the end of this year. The moment at which you enter into any legal obligation in this area determines the moment at which you have the right to request extra deduction.
6. Request a temporary loss settlement
Did you make a profit in 2017 but are you expecting to close 2018 with a loss? Submit your application for a provisional loss settlement after your income tax or corporation tax return for 2018.
You can then offset 80% of the probable loss with the profits from 2017. Any differences from the declaration will be corrected at the final assessment.
7. Purchase an expensive electric car before the end of 2018
As of 2019, electric cars that cost more than € 50,000 face an additional tax of 22%, provided that the catalog value is above € 50,000. Therefore, if you were thinking of buying an expensive electric car it is wise to do this before the end of 2018. The valuation of the wages in kind of just 4% regarding the car is yours for a maximum of five years.