The most important fiscal changes for entrepreneurs in 2021

The financial announcements for 2021 were already made a month ago during Prinsjesdag, but what is it for you as startupper that changes next year? And what about the years after that? Will you be financially better off , or should you expect to end up with less after filling out your tax reports?

In order to give you a good idea of your 2021 financial situation, we have lined up the most impactful fiscal changes of next year.

1. Reduced zelfstandigenaftrek

This is by far the most impactful change for freelance startuppers. The zelfstandigenaftrek is a fiscal advantage that allows freelancers to pay less income tax. The amount that you can subtract from your taxable income (belastbaar inkomen) is being reduced in yearly steps, which will end with €3.240 in 2036.

Next year, in 2021, the zelfstandigenaftrek will be reduced to €6.670, which is another €110 extra reduction compared to the plans laid out last year. This year, entrepreneurs could still deduct their taxable income by €7.030 (so €360 less in 2021). Since this is a significant fiscal change, other measures are changed in order to compensate for this loss.

2. Reduced basic tariff income tax

This is the first measure change to compensate for the reduced zelfstandigenaftrek. This change doesn’t just affect startuppers though, because employees also pay income tax. For incomes up to €68.507, the tax tariff lowers next year with 0,25%, from 37,35% to 37,10%. After that, the tax for incomes up to €68.507 will be further reduced every year until it reaches 37,03% in 2024.

So, what do these changes look like in practice?

If you’d make an income of €30.000 next year, this means that you wouldn’t pay €11.205 income tax, but €11.130. So that’d be €75 less. If we take the reduced zelfstandigenaftrek along in the calculation, we’d get to the following situation:

  • 2020: €30.000 - €7.030 = €22.970 taxable income. €22.970 x 37,35% = €8.579,30 income tax
  • 2021: €30.000 - €6.670 = €23.330 taxable income. €23.330 x 37,10% = €8.655,43 income tax

So that comes down to having to have to pay €76,13 more income tax on an income of €30.000 next year (not taking other discounts into consideration).

3. Increased tax discount

The increased tax discount (heffingskorting) is another fiscal change implemented in order to compensate for the reduced zelfstandigenaftrek. The heffingskorting is a discount on income tax and national insurance contributions, meaning that you’ll have to pay less tax in the end.

In 2021, the heffingskorting amount will be increased to €2.837, an €82 increase compared to 2020. If we calculate this change in the example above, we’d get the following situation:

  • 2020 income tax of €8.579,30 - €2.755 heffingskorting = €5.824,30 income tax
  • 2021 income tax of €8.655,43 - €2.837 heffingskorting = €5.818,43 income tax

As you see, without taking any other discounts into consideration, in 2021 you would ultimately pay €5,87 less tax on an income of €30.000. This is good news, of course. However, as it stands now, the zelfstandigenaftrek will low more over the years than the other measures compensate for, which means that this tax profit will ultimately disappear over the upcoming years.

4. Accommodation rent reduction for struggling freelancers

Are you a freelancer and have you suffered significant revenue losses due to the corona crisis over the past months? Then you have until December 31, 2021 to request a rent reduction from your landlord.

In order to be eligible for this reduction, you have to demonstrate that you have earned thus little over the last period that your income has dropped under a certain limit. The amount of this limit still has to be announced, so keep an eye out if you are in this precarious situation!

5. Reduced income tax for SMEs

Is your startup registered as NV or BV? Then you’re lucky because the vennootschapsbelasting (corporate tax) will be lowered. Over the first €245.000 income in 2021 you will pay 15% tax instead of 16,5%. Moreover, in 2022 the income limit for this tax rate will even increase to €395.000, meaning that up to €395.000 you’ll only pay 15% tax in 2022.

6. Innovation tax tariff increase

Is (part of) your business income derived from innovative business activities? Then you’ll lose part of your fiscal advantage in 2021. In 2021, the vennootschapsbelasting (corporate tax) on income generated from innovative enterprises will be 9%, which is a 2% increase compared to the current 7% (which was already increased from 5% since 2018).

We regret this negative tax trend on innovation, but luckily there are plenty of other institutions that continue to support and invest in innovative business ideas.

Important takeaways

Although the changes laid out for the upcoming years could still change during next year’s Prinsjesdag, it looks like most freelancers will lose out fiscally in the upcoming years. On the other hand, the rent reduction might help freelancers to sustain both themselves and their business through these challenging times. Finally, while most SMEs will enjoy fiscal benefits over the next years, those in the innovative business should start taking a fiscal disadvantage into account already.