The investment deduction is a personal and corporate income tax measure designed to promote investment. Deputy Minister of Finance De Jager has issued a decree containing three liberalizations of the investment deduction.
The investment deduction comprises three parts: the small-scale investment deduction (“KIA”), the energy investment deduction (“EIA”), and the environmental investment deduction (“MIA”). The percentage of the KIA is gradually reduced as the total amount of investments in a calendar year increases, until it reaches zero if more than EUR 240,000 is invested. The EIA applies only to designated investments relevant to efficient energy use. Each year, the energy investments eligible for the EIA are published in the “Energy List.” The EIA rate is 44%, and applies to up to a maximum of EUR 113,000,000 in energy investments eligible for the EIA per company, per calendar year. Finally, the MIA only applies to designated investments designed to protect the environment. These are itemized each year on the “Environment List.” Depending on the category of the relevant environmental investment, the MIA rate is 40%, 30%, or 15%.
KIA approval for disasters
The Deputy Minister approves in the decree that if an asset is lost in a particular financial year due to a disaster and then replaced, the asset that is lost will not count for the purposes of claiming the KIA. This may seem contradictory, but because the percentage of the KIA gradually decreases as investments increase, excluding the original investment from consideration for KIA purposes can be more beneficial from a tax standpoint.
Ex officio reductions for the EIA and MIA
Investment deductions must be applied by making a request to that effect in the relevant tax return. If you have forgotten to make such a request, then once an assessment for a particular year has been finalized, it is generally too late to do so. In the decree, the Deputy Minister has made an exception for the EIA and MIA. If a request for an ex officio reduction is made in such cases, the Dutch Revenue will grant it. The entrepreneur or company will have to have timely notified the Bureau Investeringsregelingen en Willekeurige Afschrijving (“IRWA”; the Investment Regulation and Depreciation at Will Agency) of the investment, and SenterNovem must have either issued a statement certifying that the investment is considered an energy investment, or not have issued a negative indication with regard to the investment’s qualification as an environmental investment. In principle, the ex officio reduction can be requested up until five years after the year in which the EIA or MIA could have been applied, or otherwise no later than before January 1, 2010.
Relaxation of the EIA and MIA notification terms
The IRWA must be notified of investments within three months in order to be eligible for the EIA or MIA. In situations in which the Energy or Environment List is not published before January 1 of the relevant year, the Deputy Minister’s decree has approved permitting the notification term to start on the day the Energy or Environment List is published.