Small-scale investment deduction in 2023 (KIA scheme): here's what you need to know

Introduction

In the Netherlands, we have three types of investment deduction. In this article we focus on the small-scale investment deduction. We explain what it is, when you may apply it and the amounts involved.

What is the small business investment deduction?

The small-scale investment deduction (KIA) is one of three forms of investment deduction. The KIA is an arrangement whereby you can deduct the investment in business assets from your profits. However, it is important that your investments in business assets are eligible for the investment deduction.

When do you qualify for the small business investment deduction?

To qualify for the KIA scheme, you will need to meet the following requirements::

• Your company is based in the Netherlands and you are liable for income tax or corporate income tax.
• Your investment in assets for your business fall within the annual amount set by the tax authorities. In 2023, this amount is between €2,601 and €353,973.
  • Business assets can be, for example, a laptop, business phone, desk or tools.
• In 1 year you invest in new or second-hand business assets an amount that falls within €2,601 and €353,973 in 2023.

Conditions of the small-scale investment deduction

There are a number of conditions to take advantage of the KIA scheme:

• Passenger cars may not be included as investment in business assets (exception for passenger cars intended for professional transport such as cabs or delivery services)
• Investment lower than 450 euros should not be counted
• If your investments do not exceed 2,600 euros, you are not entitled to the small business deduction.
• If your investments exceed 353,973 euros, you are also not entitled to the small business deduction.

Amounts and percentages small-scale investment deduction 2023

Use BerekenHet' s free tool to easily calculate how much you are entitled to the KIA.

Example small business investment deduction

The company makes a taxable profit of 200,000 euros. Normally, the entrepreneur there would pay 200,000 * 0.19 = 38,000 euros corporate tax.

The entrepreneur has made an investment of 120,000 euros that falls within the conditions of the KIA. This entitles the entrepreneur to deduct 17,690 euros from his taxable profit.

The entrepreneur then deducts this amount from his taxable profit, which reduces the tax payable to (200,000 - 17,690) * 0.19 = €34,638.90.

This leaves the entrepreneur with a benefit of 38,000 - 34,638.90 = 3,361.10 euros.

Divestment allowance

If you sell or donate your investment within 5 years after the beginning of the calendar year in which the investment was made, and the value of the assets collectively exceeds 2,600 euros, you must pay back a portion.

Read more about investment deduction, and the other two forms environmental investment deduction and vamil, and energy investment deduction.