How to optimally invest in your Dutch business?

When you start your business in the Netherlands, you have to invest in your company. Perhaps a risky step, because you are going to spend money without anything coming in at all yet. But these investments are often profitable in the long run. Even if your company has already existed for a while, you occasionally have to invest in your Dutch business. It is important to plan these investments well. In this article, we help you with this so you can get the most tax benefits from your investments.

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Would you like advice on how to optimally invest in your Dutch business? Or do you want help with your tax return in the Netherlands? We are happy to help you with the tax. Fill in the contact form or call us on +31 20-2170120 to discuss the possibilities.

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Make use of the investment deduction

As an entrepreneur in the Netherlands, you may deduct the depreciation costs (afschrijvingskosten) of your investments from your profit. This reduces your taxable income and, therefore, also the tax you have to pay. In addition, in many cases, you may apply the investment deduction, which reduces your profit even more. It is important to know that there is no combination possible between the environmental and energy investment deduction. The investment deduction consists of:

  • Small-scale investment deduction (KIA)

    If you want to qualify for the small-scale investment deduction (kleinschaligheidsinvesteringsaftrek – KIA), your company must be established and liable for income tax or corporate tax in the Netherlands. In 2022, you are entitled to the KIA when you have invested between €2,400 and €332,994. The amount of the deduction depends on the amount invested. If you have invested a lot, you may deduct relatively less from your profit. It makes no difference to the KIA whether you invest in second-hand or new business assets. On the other hand, for the EIA and MIA, you do have to invest in new business assets.

  • Energy investment deduction (EIA)

    You may use the energy investment deduction (in Dutch: milieu-investeringsaftrek) for investments in business assets that are on the Energy List. The purchase costs must be at least €2,500 per asset. The maximum investment amount is €128 million. Do you meet these conditions? Then you may deduct an extra 45.5% of the investment price from your profit.

  • Environmental Investment Deduction (MIA)

    This concerns environmentally friendly business assets. You may qualify for the environmental investment deduction for an investment in business assets on the Environmental List. Also for this deduction, the minimum investment is €2,500 per asset. The total investment eligible for the MIA is a maximum of €50 million. The investments are divided into three categories with a different environmental investment deduction:

    • Category I: 45%
    • Category II: 36%
    • Category III: 27%

Good investment plan for optimal tax benefits

It is important to make a good investment plan for your company. Good planning could save you some money. But why? Well, we will tell you why!

The first reason has to do with the tax brackets. Is your profit in 2022 more than €69,399? Then you end up in the second bracket and pay the high tax rate (49.5%). Do you expect to achieve a lower profit next year, which would place you in the first tax bracket (37.07%)? Then it is wise to make the investment you have planned for next year this year. This gives you a greater tax advantage.

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Get the most out of the KIA

In addition, it is wise to take a good look at the small-scale investment deduction. For this deduction, you must invest at least € 2,400 per year. If you invest relatively little, it could be wise to make the small investments in one year, so that you can use this deduction.

But are you investing a lot? Then it is wise to spread these investments over several years. Investments up to €59,940 have a relatively higher deduction than an investment amount that comes above. Via this link, you’ll find the table of the small-scale investment deduction 2022.

Help with your tax return in the Netherlands

Would you like some help with your tax return, or do you have questions about the investment deduction? We are happy to help you! Please, contact us using the details mentioned below.

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