Measures for individuals – Tax Plan 2022
19 oktober 2021 | Door: Matthijs van Dorssen
The calculation method for the Tax on wealth stays unchanged. There will be a change that can be profitable if you recently sold a house and will buy a house with a new partner.
Rates in Box 3 – Savings and investments
As expected the rate in Box 3 will be maintained at the current rate of 31% in 2022. The tax-free allowance will be raised slightly to € 50,650. No changes are being made to the bands. In 2022 these will be:
- From € 50,000 to € 100,000 (band 1)
- From € 100,000 to € 1,000,000 (band 2)
- From € 1,000,000 (band 3)
Please note: The tax-free allowance in Box 3 will not affect your entitlement to allowances, such as care allowance, housing allowance or the child-based budget. The capital limits that determine eligibility for these allowances are lower than this.
Reduction in mortgage interest relief on own home
Since 2014 the tax advantage available in the form of mortgage interest relief has been gradually reduced, if the interest is deducted at the highest income tax rate in box 1. It will be possible to deduct mortgage interest at a rate of 40% in 2022 (43% in 2021). A further reduction will be applied in 2023, with the result that mortgage interest will be deductible at a definitive maximum rate of 37.05%. This percentage corresponds to the rate in the first income tax band. It also applies to many other deductibles.
Do you pay little or no interest as you have no or only a small home acquisition debt? In that case you can take advantage of the Hillen deduction. This deduction is being phased out over 30 years and in 2022 will amount to 86.67% (2021: 90%).
Notional rental value to be reduced
The reduction in the notional rental value that was previously announced is being maintained. The notional rental value is a percentage of the WOZ value (value for the purposes of the Valuation of Immovable Property Act) of your home and is added to your income. The own home deductible item will therefore increase. Up to a value of € 1,100,000 the notional rental value will be 0.45% in 2022 (0.50% in 2021) and above € 1,100,000 will remain at 2.35%. This reduction is intended to compensate for the scaling back of mortgage interest relief.
Change to homeownership scheme in partnership situations in the event of death
Since 2004 rules relating to the tax deductibility of mortgage interest in the event of an increased mortgage loan (bijleenregeling) have been in force. Briefly put, these rules mean that if the proceeds from your old home exceed your outstanding mortgage debt on this property, the excess amount must be deducted from the loan for your new home. As a result, your new home acquisition debt (EWS) is reduced. The profit described above is also referred to as the home equity reserve (EWR). Since 2013 a loan taken out to buy your own home has had to have a repayment term of no more than 30 years to qualify for interest relief. Whether you satisfy this condition is determined on the basis of the repayment balance (aflossingsstand). Changes are being made to how the EWR and EWS are assessed in situations in which a domestic partnership for tax purposes has been entered into. As a result, such debts will be treated more fairly in future.
The following changes are being made:
- Half of the other partner’s EWR and repayment balance will only be transferred to the spouse if the spouses were married under a general community property regime.
- In situations in which they were not married under a general community property regime, the other partner will be free to use the unused EWR allowance, as long as the partners have jointly contributed sufficient capital.
- The EWR and repayment balance will not be transferred to the other partner in the event of death.
A and B are unmarried and purchase a property for € 340,000. They take out a mortgage of € 300,000 for this. € 40,000 of the purchase is financed from the assets of A, which he earned from the sale of his previous home.
Up to the end of 2021:
Share of A in the mortgage: € 150,000
Share of A in the property: € 170,000
Current EWR of A: € 40,000 -/-
Maximum EWS of A: € 130,000 -/-
Share on which there is no interest relief: € 20,000
Maximum EWS of B: € 170,000
Mortgage of B: € 150,000 -/-
Unused EWS allowance: € 20,000
When the home is purchased A may also use the allowance of B, as a result of which interest relief is permitted on the entire EWS (€ 300,000).
Unforeseen circumstances before home is acquired
Since 1 January 2021 there have been three rates of transfer tax:
- For first-time buyers up to the age of 35 who acquire their own home with a maximum value of € 400,000 a reduced rate of 0% applies. However, this is subject to the condition that the property will serve as the buyer’s main residence and he/she has not previously benefited from the exemption.
- A reduced rate of 2% applies to a buyer who acquires a property that will be used as his/her main residence.
- Other acquisitions of immovable property, e.g. properties that the buyer will not be living in and non-residential properties (e.g. commercial premises), are subject to a rate of 8%.
The reduced rates only apply if the property will be used as the buyer’s main residence. In practice, unforeseen circumstances often arise that prevent the home from being used as a main residence. The law allows such circumstances arising after the moment of acquisition to be taken into account.
It is also possible for unforeseen circumstances to arise after the purchase contract has been concluded, but before the property has been transferred (notarial transfer). These circumstances may include the loss of the home, divorce, the acceptance of a new job and/or loss of a job or the death of a buyer. At the moment the law does not stipulate that the reduced rate still applies if such circumstances arise between the conclusion of the contract and the transfer of the property. The government wants to ensure that unforeseen circumstances are also taken into account in such situations. The following conditions must be met for this to be the case:
- The unforeseen circumstance must arise in the period between the signing of the purchase contract and the time of the notarial transfer.
- This circumstance must mean that it is no longer possible to satisfy the main-residence criterion.
Change to anti-abuse provisions in the area of transfer tax
Since April 1st 2021 it has only been possible to apply the transfer-tax exemption for first-time buyers if the value of the acquired property does not exceed € 400,000. It would be possible to get around this maximum amount by selling the house in stages, e.g. selling the enjoyment of the property first, followed by the sale of the rest of the property. Anti-abuse provisions were therefore drawn up that add together the total value of the acquired property and the value of the rights to which the property is subject.
It is proposed that two areas of uncertainty be removed from these anti-abuse provisions:
- If, following a subsequent acquisition within the same year, the combined value of the properties acquired is less than the property valuation threshold of € 400,000, transfer tax will only be payable on the value of the subsequent acquisition.
- If the first acquisition took place before April 1st 2021 and the subsequent acquisition after this date, the anti-abuse provisions will not apply.
Lastly, it is proposed that these anti-abuse provisions will not be applied in the event of acquisitions under succession law or matrimonial property law.
Tax exemption for gifts spent on own home
The one-off increase in the amount that can be gifted free of tax, provided that the recipient spends it on his/her own home, currently € 105,302, will be maintained in 2022. The actual level of the exemption will be announced at the end of 2021.
Abolition of study allowance and introduction of STAP budget
With effect from January 1st 2022 the STAP budget subsidy scheme (learning and development budget intended to enhance a person’s labour market position) will enter into force. The current arrangement under which study expenses can be deducted for tax purposes will then be abolished. This deduction was particularly advantageous for high-income taxpayers. Taxpayers on lower incomes benefited less from it. From January 1st 2022 study expenses will no longer be deductible on the income tax return. Use can be made of the new subsidy scheme instead. People who are in work or out of work can apply for a budget of up to € 1,000 (including VAT) for a training activity. The budget can supplement other contributions received from the employer, the local authority or the Employee Insurance Agency (UWV), for example.
Change to income-dependent combination tax credit (IACK) for foreign taxpayers
Foreign taxpayers with a partner currently qualify for the income-dependent combination tax credit, even though that is not always the intention. This is the case, for example, for people who work in the Netherlands, but live abroad with a non-working spouse and a child under the age of 12. From January 1st 2022 the government wants to change how the IACK is awarded in the case of foreign taxpayers by ceasing to apply the exception to the concept of ‘tax partner’ to the IACK.