End-year Tax Tips19-11-2017 - Bridge Consulting
With the end of the year in sight, this is a good time to check whether you still need to take action in the tax area. For some things you can not wait until 2018, but other things just ask for postponement until the new year. In any case, there are several changes that require attention. You can read which ones are in these end-of-year tips.
Request VAT for 2017 back
Does not a debtor pay your invoice? From 1 January 2017, you will be entitled to a refund of VAT as a creditor no later than one year after the claim becomes due and payable. You may deduct the amount of the refund from the periodic VAT return. You no longer have to submit a separate request to the tax authorities. Is it clear before 31 December 2017 that the invoice will not be paid by your debtor? In that case, you must request VAT refunds for the period in which it becomes clear that your debtor will not pay. If the irrecoverable claim is still paid at a later date, you must again pay the VAT previously deducted from the tax return on your return.
Did you issue invoices in 2016 and have they not yet been paid? You can then request a refund of VAT from 1 January 2018. However, if at any point in 2017 it is already established that there is an irrecoverable claim, you must reclaim the refund for the period in 2017 in which the claim has proved to be definitively uncollectible.
Debtor: pay VAT back in time
Did you receive invoices for which the payment term has expired and have you not yet paid these invoices? In that case, you must reimburse the VAT that you deducted at the time to the Tax Authorities. This must be done within one year at the latest ('1-year term') after the debt becomes due and payable.
For each VAT return in 2017, check whether there are debts to creditors whose 1-year term is soon over. And if you do not expect to pay these debts within the 1-year term, then in 2017 you still have to correct the VAT previously deducted.
Register before 1 January 2018 for MOSS scheme
If your company provides digital services to private individuals in other EU countries, you can also use the mini-one-stop-shop-arrangement (MOSS) in 2018. You only have to declare VAT on these services in one EU country, for example the Netherlands. If you want to apply this regulation for the first time, you must apply for this with the form 'Request registration in the Netherlands for paying VAT in EU countries'. In the registration form you indicate the desired starting date. From that date you must make a VAT declaration no later than 20 days after the end of the quarter and pay the VAT due. If you want to apply the scheme throughout 2018, please register as soon as possible.
If you have previously delivered a digital service, you must submit your registration at the latest on the 10th day of the month following the month in which you delivered the service. If you register after the 10th day, you risk that the MOSS scheme can not be applied to all digital services. And then you have to contact the tax authorities of the EU country where the service was provided and check whether you have to register there.
Recover EU VAT for 2017
Did you pay VAT in another EU country in 2017 and did you not yet request this VAT? Provided you meet the conditions that the various EU countries apply for the refund of VAT, you can still do so via the website 'Refund of VAT from other EU countries'. For this you need login details. You can request this via a tool on the website of the tax authorities. You must submit your refund request by 30 September 2018 at the latest, but it is advisable to prepare for this early on.
Correct private use car 2017
The VAT invoiced to you in 2017 for the purchase, maintenance and use of the business car can be deducted as long as the car is used for taxable turnover. Did you also use the car in 2017 for private purposes? In that case, you must apply a correction for this private use in your last VAT return of 2017. You can use the flat-rate scheme for this, assuming 2.7% of the list price (including VAT and BPM). For certain cars, including cars that have been used in the company for five years, you may apply a flat rate of 1.5% of the list price (including VAT and BPM).
Do not pay the fuel for the company's car in cash, but with a bank card, credit card or fuel card of the case. For example, you can prove for the deduction of input tax that you paid the fuel in the name of the case.
Check your VAT returns for 2017
Check as soon as possible that your VAT returns for 2017 are correct. Please also take into account any VAT adjustments for, for example, the private use of the company car and the private use of electricity, gas and water. If your checks reveal that you have declared too little VAT in 2017, you must correct this before 1 April 2018 with a supplement declaration. You then pay no tax interest on the amount of the additional assessment (4% in 2017). You can, however, receive a default penalty of 5% on the amount owed.
From 1 January 2018 you can only submit a supplement declaration digitally. This can then be done in three ways: via the site of the Tax Authorities (at 'Log in for entrepreneurs'), with its own software or via an advisor.
You only need to use the supplement declaration for corrections of more than € 1,000. You can process lower corrections in your next VAT return. The limit of € 1,000 does not apply, however, if you make use of the small business scheme, because in case of a correction you must always use the supplementation form.
Request too much VAT refunded in a timely manner
If, during the audit of your VAT returns, you discover that you have paid too much VAT, you can also correct the excess VAT with a supplement declaration. This is possible not only for 2017, but also over the five previous years. As with the correction of underpaid VAT, you do not have to use the supplement declaration if the correction does not exceed € 1,000. In that case, you may process the correction in your next VAT return.
VAT that you paid too much in 2012 can only be corrected in 2017. So check as soon as possible whether you still have to carry out a correction in 2012.
Do not forget the BUA correction
If you deducted VAT on business gifts or employee benefits in 2017, you must check with the last VAT return for 2017 whether you have benefited one or more employees for more than € 227 (excluding VAT). You should also check whether you have favored one or more relationships for more than € 227. If this is the case, then you must correct the deducted VAT in the VAT return for the last period of 2017 and still pay it. This is also referred to as the BUA correction (BUA: Decision excluding the deduction of sales tax).
Separate rules apply to the VAT deduction for the costs of providing food and drink to staff. Furthermore, the car of the business and the bicycle of the business fall outside the BUA scheme.
Note the review period
With regard to your movable and immovable property, it is important to keep an eye on the VAT revision periods. This period is ten years for real estate and five years for movable property (other assets). Did you invest in an immovable property in 2017 and deduct the VAT as input tax? Then at the end of 2017 and the next nine years (four years for movable property) you have to check whether the originally planned use still corresponds with the actual use. If actual use differs by more than 10% of your estimated usage, you must correct the deducted VAT. This 10% margin does not apply in the year of first use.
Request for KOR exemption before 1 January 2018
If you have a sole proprietorship or if you are a partner or partner in a partnership or general partnership, you can qualify for the small business arrangement (KOR) under certain conditions. The VAT due after deduction of input tax may then be a maximum of € 1,883. Do you expect to pay € 1,345 or less VAT in 2018? Then you do not have to pay VAT at all. Moreover, you can request an exemption for administrative obligations. If your request is granted, you will in principle no longer have to file a VAT return.
If your request is approved, the exemption will in principle start from the next year. But subject to conditions, the exemption is retroactive to the date on which the request was submitted. So submit your request for 2018 in 2017, because this increases the chance that you will be able to benefit from the exemption in 2018.
Issue 90% declaration in time
If you purchased an immovable property in 2016 and opted for a VAT-taxed delivery together with the seller, you must submit a so-called 90% within four weeks of the end of the financial year following the fiscal year of delivery (ie before 28 January 2018). declaration to the seller and the inspector. In this declaration you must state whether you are using the immovable property for purposes for which you are entitled to VAT deduction for at least 90%. As soon as you no longer meet the 90% criterion, the delivery is still deemed to be free of VAT. For the seller, this means that the right to deduct VAT will lapse and that he must repay the VAT deducted in advance to the tax authorities.
Make clear agreements in the purchase agreement about the possible VAT damage if the option for VAT-taxed delivery expires. For example, in the purchase agreement it can be arranged that the buyer reimburses the VAT damage to the seller if he no longer meets the 90% standard.
Request for an annual VAT return before 1 January 2018
If you do not owe more than € 1,883 in VAT on an annual basis, you can submit a request to your tax office under detailed conditions to file an annual VAT return, instead of per quarter. If you want to use this already in 2018, please submit your request in 2017.
Are you currently filing VAT returns once a quarter and are you structurally returning VAT? Then you can easily obtain a liquidity benefit by submitting a monthly declaration. You must also submit a request to your tax office for this.
Purchased solar panels? Use the KOR!
If you have purchased solar panels in 2017 and are now supplying power to your energy supplier, the tax authorities will consider you as an entrepreneur for VAT, even if you have purchased the solar panels as private individuals. By registering as an entrepreneur, you can reclaim the VAT charged to the Tax Authorities. You then have to pay VAT per period of time on the electricity you supply to the energy supplier, but this can be avoided in 2018 by applying the small business scheme (KOR).
Is the VAT amount payable in the years after the purchase of the solar panels no higher than € 1,345 per year? Then you can - if you meet the conditions - request an exemption for the administrative obligations. You therefore no longer have to file a VAT return. Do this as quickly as possible, because then the exemption will apply from 1 January 2018.
If you are an entrepreneur or a self-employed person, all your VAT to be declared is important for the application of the KOR. This means that you will also be obliged to submit VAT returns for the solar panels if the total VAT to be paid on an annual basis is higher than € 1,345. And then you can not get an exemption for the administrative obligations.
KOR: Explain investment
If you use the Small Business Plan (KOR) in 2017 and you intend to invest, it may be advisable to wait until after 1 January 2018. Because under the KOR, the deduction of VAT may be unfavorable and if you dispensation for the administrative obligations, the deduction is not possible at all. If you expect your company to grow to such an extent in the short term that you will no longer be able to apply the KOR from 2018 onwards, it is wise to wait with your investments until you no longer use the KOR. After all, all VAT paid is deductible as input tax at that time.
Conversely, it would be wise to highlight investments if, for example, you apply the KOR in 2018. If you still make these investments in 2017, you can still deduct the VAT paid.
Review for farmers
If your company currently uses the VAT agricultural scheme, which will be abolished as of 1 January 2018, you can, on the basis of a transitional arrangement, convert the turnover tax on capital goods that you have used before 1 January 2018 and the sales tax on investments that you made on 1 January 2018. 2018 has not yet taken into use, yet subtract. This scheme applies to farmers, livestock farmers and gardeners and foresters. You can use the revision scheme for the investment goods that you have taken into use before 1 January 2018. Under certain conditions, this revision does not take place over a number of years, but can take place in one go during the first period of 2018.
Connect wage and financial administration to each other
At the end of 2017, check as quickly as possible whether the payroll administration and the financial administration match up. After all, it is possible that one or more (taxed) reimbursements have not been processed by mistake in the payroll administration. And then no wage tax and national insurance contributions have been deducted from these allowances or final taxes paid. In making the connection between the payroll and the financial administration, such deviations come to light. You can then still pay the payroll taxes due, possibly in the form of a final levy.
Make full use of the free space
Check whether you have made full use of the free space of the labor costs scheme in 2017. The free space is 1.2% of the tax payroll. If it turns out that there is still enough free space, you can use it for example for the Christmas package or for an end-of-year drink, which incidentally only has to fall within the free space if it takes place at an external location. And if you still have room left over, it may be useful to bring forward benefits that are planned for early 2018 and fall under the free space. Furthermore, if the free space is also 1.2%, you have to take into account extra work costs compared to the past year.
Have you already paid a final levy in 2017 due to an anticipated excess of the free space and do you later discover that this was too much or too little? Then you can correct this appearance in the payroll tax return for the first period of 2018.
Give your employee a bonus in 2017
If you still have free space at the end of 2017 and you are considering giving one or more employees a bonus, you can drop this bonus into the free space, provided you still pay this in 2017. However, the bonus must meet the customary criterion. This means that the bonus may not differ by more than 30% from what is customary for comparable employees in the same sector.
ESTATE PLANNING / PRIVATE
Donate before 1 January 2018
If you donate a gift to your (grand) children before 1 January 2018, they can use the annual exemption from € 5,320 (children) or € 2,129 (general exemption). In addition, a one-off exemption for donations of € 25,526 applies for children between the ages of 18 and 40. The day of the 40th birthday falls within the age limit. Is it a donation to children for a study, then the one-time exemption is € 53.176. With a donation for an owner-occupied home, the one-time exemption is even € 100,000. With regard to this one-off exemption, however, it is not necessary to rush with a donation, because from a fiscal point of view it makes no difference in principle whether the donation is made in 2017 or in 2018. The € 100,000 exemption applies to anyone between the ages of 18 and 40.
You do not have to donate the entire amount of € 100,000 in a year. You can apply the unused part spread over a period of at most two years that follows directly on the first-mentioned calendar year. Keep in mind that the application of the increased exemption is influenced if a one-off increased donation was already applied in a previous year.
With regard to a one-off exemption, the beneficiary may not exceed the age limit of 40 years, even if you donate. If the person you want to serve has already reached the age of 40, but if his partner is younger, the one-time exemption can still be applied.
Donate the purchase price of the owner-occupied home in parts
Are you considering donating a home and the WOZ value is higher than the valued value? Then think about transferring that house where the purchase price is converted into a loan and then partial remission (= donation) of that loan in December 2017 and in January 2018. If you have not yet donated anything to the transferee in 2017, he can make use of the exemption for 2017 and again in 2018. You can also plan the donation of the purchase price (remission) in such a way that, in both 2017 and 2018, you use as much as possible the lowest rates of gift tax. In case of a donation of the purchase price within a short time (at least within one month) after the transfer of the house, you can also offset a part of the transfer tax charged.
Is the WOZ value of the home lower than the valued value? Consider giving the house yourself, but then check whether it is not more advantageous to donate the purchase price in parts.
Round maintenance house timely
Did your child apply the increased gift tax exemption in 2015 to your donation for the improvement or maintenance of your own home? Bear in mind that the amount of the donation must have been spent on improvement or maintenance within two years after the calendar year in which the amount was donated. This donation can be dissolved if the conditions are not met. Point out to your child that these activities must be completed in 2017 so that the donation does not expire!
Prevent the exemption from evaporating
If in 2015 or 2016 use was made of the one-off increased gift tax exemption (of a maximum of € 52,752 and € 53,016 respectively) for the owner-occupied home, in 2017 or 2018 as a donor you can supplement your previous donation with a maximum of € 46,824. However, the recipient or his partner still has to comply with the applicable age requirement (18-40 years). The entire amount must also be used for the owner-occupied home.
Plan training in 2018
Even in 2018, training costs for a study program or study aimed at a (future) profession are still deductible. The abolition of the deduction for educational expenses has been postponed to 1 January 2019. This means that you will no longer have to make haste in 2017 by just doing training expenses quickly, because they will also be deductible in 2018. Of course it does not hurt to make a plan for the training you want to follow.
Entrepreneurs can continue to deduct the costs for training after 2018. Under certain conditions these are company costs for them.
For more questions and tips, please contact us
Bridging business is our mission
© Sdu Licent Academy 2017 - The utmost care has been taken in editing this document. Nevertheless, editors or publishers can accept no liability for any inaccuracies or imperfections.