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Grant Thornton's Tax Sustainability team assists organisations by providing insights into available taxes, grants and compliance requirements. We would be happy to assist your organization in designing and implementing a sustainable tax strategy.
As the world is changing, it becomes more important to not only focus on the financials, but also on other stakeholders, e.g., the environment. In that light, for example, although the ESG reporting is not obligatory for all companies, some companies are already preparing an ESG report voluntarily.
If you are considering investing in new assets for a minimum amount of 2,500 euro (2023 figures), it is worth to consider assets that are environmentally friendly and/or investments that cause energy savings and sustainable energy. You will not only be one step ahead as sustainability is an important part of an enterprise, the Netherlands also has various schemes available for companies that invest in such assets, with considerable tax benefits.
The two important investment schemes are Environmental Investment Allowance/Random depreciation of environmental investments (MIA/VAMIL) and Energy Investment Allowance (EIA).
The Environment Investment Allowance (MIA) and the Arbitrary Depreciation Facility for Environmental Investments Facility (VAMIL) are two distinct investment facilities. Nevertheless, the facilities can be applied simultaneously to many qualifying investments.
The MIA offers the opportunity to deduct up to 45 percent of the investment from the taxable profit. The percentage depends on the environmental effects and the prevalence of the asset. In the most favourable conditions, the financial benefit can amount to 14 percent of the initial investment.
The VAMIL is a depreciation facility, applicable to environmentally friendly investments. The facility provides the opportunity to depreciate 75 percent of the investment at a random moment. This brings the extra advantage of being able to choose in what year the facility is applied, for example when profits have been extraordinary high. Using the facility to the full extent may result in a liquidity advantage as well as an additional interest rate advantage.
Based on Dutch tax legislation, the government will provide enterprises with an extra deduction if they invest in equipment that are energy saving and causes sustainable energy. The deduction will amount to 45.5 percent of the investment costs. This deduction is an additional deduction to the normal depreciation scheme applicable in the Netherlands.
As a result, the energy costs will be reduced and tax benefit could be claimed.
Note: Due to a budget overrun, the Energy Investment Allowance (EIA) will be reduced starting in the year 2024. Additionally, the maximum investment amount ceiling will also be lowered.
Besides the green investment schemes, there is also a ‘standard’ small investment allowance available in the Netherlands. A company can opt for this allowance in case they invest in assets between 2,600 euro and 353,973 euro.
Based on Dutch tax legislation, the taxpayer can make use of both the EIA and the small investment allowance or the MIA/VAMIL and the small investment allowance.
However, it is not permitted to both apply for MIA/VAMIL and EIA for the same asset. It is important to assess what investment scheme is most beneficial in the given circumstances.
It is crucial to keep in mind that the investment must be reported at the competent authority within three months after the investment, in order to be eligible for the MIA or EIA.
If you are interested in these schemes, contact your tax adviser at Grant Thornton in the Netherlands.
