Government gives businesses greater scope to invest

From 1 July 2013 until the end of this year, businesses will be able to immediately write off up to half of the cost of new capital assets for tax purposes. This will enable them to reduce their tax bill over the next couple of years. It will provide extra scope for investment amounting to some €400 million. This measure, proposed by State Secretary for Finance Frans Weekers and Minister of Economic Affairs Henk Kamp, has been approved by the cabinet.

Statistics Netherlands reports that capital spending by businesses fell by almost 8% in the first quarter of 2013. The Netherlands Bureau for Economic Policy Analysis anticipates a 10% fall for 2013 as a whole. 'A contraction of this size is cause for concern,' said Mr Kamp. 'This measure gives businesses more scope to invest in the economy, giving a much-needed boost to incomes and jobs in these difficult economic times.' 

'Thanks to this arbitrary depreciation scheme,' said Mr Weekers, 'businesses can defer their tax remittance in 2013 by a number of years. This will give them extra cash and an added incentive to invest now. This will benefit not only these businesses but the Dutch economy as a whole.'

The temporary arbitrary depreciation scheme will start on 1 July 2013 and will run until the end of the year. The scheme is open both to businesses that pay corporation tax and to those that pay income tax. On a one-off basis, up to 50% of spending on capital assets in the second half of the year can be depreciated arbitrarily. Normally a lower percentage applies.

Arbitrary depreciation means that in the first year a business can decide for itself how much of an investment is deducted for tax purposes. To qualify, the asset in question - a piece of machinery for example - must be taken into use by 1 January 2016 at the latest. Otherwise any arbitrary depreciation applied will be reversed. Under the scheme, businesses end up paying the same amount of tax in the end, but receive a cash boost of some €400 million between 2013 and 2014.