Environmental
Increasingly strict tax legislation has been and will be introduced to discourage investments in energy intensive and polluting industries. Examples of current restrictive taxes are:
- Carbon Border Adjustment Mechanism (CBAM);
- Flight tax;
- Energy tax; and
- Coal tax.
ESG-related tax incentives can help environment-related investments. There are several tax incentives for Dutch taxpayers investing in business assets in general, and more specifically environmentally friendly investments and/or developing intangible fixed assets through R&D. Please find below a summary of the main incentives for Dutch corporate income tax and wage tax purposes:
Business incentives
The small-scale investment incentive provides for tax deductions for corporate income tax and personal income tax purposes if you acquire one or more new qualifying business assets. The small-scale investment incentive allows you to deduct the amount of the investments from the taxable profit up to an amount of EUR 17,841 (in 2023), subject to certain conditions.
The investment incentive for environment-improving assets provides for tax deductions if you acquire one or more new environment-improving assets. The deduction generally amounts to 45% of the amount of the investment. The investment should be on the list published by the Netherlands Enterprise Agency (RVO), and requires a notification from the RVO.
Under conditions similar to those of the investment incentive for environment-improving assets, it is possible to apply the random depreciation regime to environment-improving assets or energy-improving assets. Under this regime, taxpayers can randomly depreciate 75% of the investment made in the qualifying asset. Besides the above-mentioned incentives there is a temporary incentive enabling taxpayers to randomly depreciate 50% of investments made in most assets purchased or created in 2023.
Innovation box
Dutch taxpayers can apply for an "innovation box regime" to qualifying profits from certain self-developed intangible fixed assets. Under the innovation box regime, profits are included in the tax base of a taxpayer for 9/25.8 part only, resulting in an effective tax rate of 9%.
Qualifying profits are benefits from qualifying self-developed intangible fixed assets multiplied by a nexus ratio. The nexus ratio amounts to 130% of the taxpayers’ operating expenses and third-party outsourcing expenses incurred in creating the relevant asset, divided by any expenses incurred in creating the relevant assets, with a maximum of 100%.
For small taxpayers, qualifying assets are intangible fixed assets developed through by research and development (R&D) activities for which a so-called R&D certificate was issued.
Taxpayers are considered small if their net group turnover is less than EUR 250 million in the respective financial year and the four preceding years combined, and the benefits derived from the intangible assets are less than EUR 37.5 million in the respective financial year and the four preceding financial years combined. For large taxpayers, qualifying assets are intangible fixed assets developed through R&D activities within the scope of certain specific categories.
R&D wage tax credit regime
The R&D wage tax credit regime enables companies that engage in R&D activities to pay less wage tax and social security contributions than they withhold from their employees.
The amount of the reduction is limited to the total amount of wage costs and social security contributions. R&D costs may include both wages and other costs related to self-developed R&D.
To qualify for the R&D wage tax credit regime, companies have to apply for a permit from the RVO. The granting of this permit is subject to the following conditions:
- the R&D activities (eg, development of a product, production process, software or technical research) will be performed in-house by the applicant;
- the innovation is new to the applicant’s organization ;
- the applicant seeks to solve technical difficulties in the development process;
- the R&D activities are performed within the EU; and
- the R&D permit is requested in advance.
In addition, the granting of the permit is subject to the available funding.
