Prinsjesdag 2020: the highlights for entrepreneurs

Prinsjesdag 2020: the highlights for entrepreneurs

Yesterday on Prinsjesdag the Dutch cabinet presented the Budget Memorandum (Miljoenennota), as is the tradition. The Budget Memorandum announces all tax plans for next year. What are the highlights for creative entrepreneurs in the Netherlands in 2021?

Just like every year adjustments have been made in tax percentages and tax credits to make sure the effect in purchasing power is as fair as possible for everyone.

1. Private business ownership allowance
The private business ownership allowance will decrease faster and further in the future to € 3.240. In 2021 the private business ownership allowance will be € 6.670. According to the cabinet the decrease will be compensated by lower income tax and an increase of tax credits to make sure entrepreneurs will increase in purchasing power in the overall balance.

2. TOGS (Reimbursement for entrepreneurs in affected sectors) & TVL (Reimbursement Fixed Costs SMEs)
The TOGS and TVL (support measures because of the corona crisis) are free of income tax. This mean you won’t owe any income tax over these reimbursements.

3. Income tax
The lowest rate for income tax will decrease to 37,10% (this was 37,35%). Eventually this rate will decrease to 37,03% in 2024. Because the lowest rate is decreased, everyone will profit from this.

4. Relief box 3
The relief in box 3 is increased to € 50.000 for singles. For fiscal partners it’s the double amount: € 100.000. When your savings and investments are below these limits you don’t have to pay taxes over these assets.

5. Deductions
Deductions such as the deduction from the interest over your mortgage and annuities, but also the Private business ownership allowance, will only be deductible for a maximum of 43%.

6. Transfer tax
Transfer tax is the tax you pay when you buy a house. There have been made a couple of changes in the transfer tax:
Transfer tax for people between 18 and 35 is eliminated. So when you buy a house and you’re in this age category you won’t have to pay this 2%. You can only make use of this tax benefit once.
Other people buying a house to live in will still pay 2%. For people and legal entities buying a house that they will not live in the transfer tax will be increased to 8%. This increasement affects people buying a holiday home, a home for their child or a home as an investment.