28 Oct The Dutch government aims to stimulate investments through BIK scheme
The Dutch government aims to stimulate investments through BIK scheme
28 October, 2020
The Dutch government is looking at a new investment discount, the Job-related Investment Discount (Baangerelateerde Investeringskorting or BIK) scheme, a tax incentive for companies to keep investing during the COVID-19 crisis. EUR 4 billion has been set aside for this temporary scheme.
On the one hand, the BIK scheme is intended to make sure companies continue to invest in, for example, new machinery during this unprecedented crisis. On the other hand, it aims to bring forward investments that would otherwise be postponed. The BIK scheme is set up as a discount on the payroll taxes that are due. According to the Dutch cabinet, the main advantage is that the same investment is equal for all companies (with a sufficient number of employees), and not only benefits companies that make a profit.
Only for new investments
The investment discount only applies to new investments in operating assets which have been committed to on or after 1 October 2020. It concerns a temporary discount and is valid for the years 2021 and 2022. This means that the investments need to be paid in full between 1 January 2021 and 31 December 2022, and must be introduced into operation within six months of that full payment. The scheme does not apply to investments made after 31 December 2022.
Level of discount
For investments up to € 5,000,000 per calendar year, companies receive a discount of 3% of the investment amount, which they can deduct from their remittance of payroll taxes and social security contributions. Insofar as the investment amount exceeds € 5,000,000, the discount is 2.44% above that threshold. In addition, all applications are subject to a minimum amount of € 1,500 for each operating asset and € 20,000 per application.
Implementation of the BIK
The scheme will be implemented by the Netherlands Enterprise Agency (RVO) in cooperation with the Dutch Tax and Customs Administration (Belastingdienst). For practical implementation reasons, businesses can only apply to take part in the scheme from 1 September 2021 onwards. After the RVO receives the application, a BIK declaration will be issued within twelve weeks. Companies will then be able to set off the discount against the payroll taxes.
At the end of 2021, the scheme will be assessed based on the applications submitted up to that point to determine whether the discount percentages need to be adjusted downwards or upwards for 2022. This will be announced no later than 15 December 2021.
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