Companies in the travel industry are confronted every day with various types of taxes. The tax specialists from the Travel, Leisure & Tourism market group would be happy to share their extensive practical experience and knowledge of the industry with you.
VAT is usually an important point of consideration for businesses in the travel industry. A hotel, for example, has to charge 6% for the provision of accommodation, while the higher rate of 21% applies to other ancillary services (such as parking and dry cleaning). However, if these additional services are subordinate to the provision of accommodation, the 6% rate may nevertheless apply. It is also possible that guests don’t show up, while their overnight stay has been paid for. Can the hotel then reclaim the VAT?
For tour operators there are special VAT rules, contained in the Tour Operators Margin Scheme. In short, this special VAT scheme means that there is no entitlement to recover the VAT on the purchase of travel components and that VAT is payable on the profit margin. In practice, it appears that companies other than tour operators/travel agencies are, often unintentionally, covered by this scheme because they offer travel (excursions, for example) to their customers in their own name.
The VAT specialists of Meijburg & Co will be happy to be of service. With our specially developed VAT quick scans for the travel industry, businesses can quickly gain insight into the opportunities and risks in the field of VAT.
Payroll tax and social security contributions
Companies in the travel industry often have many staff whose employment also entails various tax aspects. Staff benefits, such as meals during working hours, work clothing and staff discounts, may not only have consequences for payroll tax and social security contributions, but also for VAT.
Many companies in the sector make use of students and trainees, who work for them for long periods. Under certain conditions, a payroll tax rebate may apply to these employees. Specialist staff hired from abroad may be eligible for the 30% ruling, such that 30% of their salary can be paid tax-free. When hiring self-employed individuals in particular it is important that the policy in respect of Declarations of Independent Contractor Status (“VAR-verklaringen”) is correct. The regulations concerning Declarations of Independent Contractor Status are expected to change with effect from April 1, 2016. Companies should then use agreements approved by the Dutch tax authorities when hiring self-employed individuals. All the more reason to carefully evaluate the agreements with self-employed individuals in the coming months.
Local (municipal) taxes
If your company owns real estate, you are also confronted with the taxes on it. Especially for hotels, for a long time there was hardly any agreement about how the value of the property for the purposes of the Valuation of Immovable Property Act (“WOZ”) had to be determined. The uncertainty has now come to an end with the taxation guide for hotels produced by the VNG (association of Netherlands municipalities). The VNG is committed to greater uniformity in property valuation and to this end has issued guidelines for municipal appraisers. In practice, however, the result of this is that the WOZ values are on average higher than in the past.
There are also differences of opinion in practice about tourist tax and especially the basis for its calculation.
Meijburg & Co helps its clients with the evaluation of the WOZ decision and files a notice of objection if the value is set too high. You can also contact our specialists if, for example, you have questions about tourist tax and frontage tax.
Corporate income tax
Dutch companies pay corporate income tax on their taxable profit. The rate is 20% if the profit does not exceed EUR 200,000 and 25% on the part of the profit above this. Corporate income tax is levied on the ‘taxable amount’, which, in short, consists of the profit for tax purposes as recorded in the financial statements, but which is still subject to various tax adjustments. This is because the rules applying to tax are different from those applying to annual reporting. For example, it is possible to deduct costs for tax purposes sooner or to temporarily exclude certain income from taxation. By efficiently applying the tax rules, corporate income tax can be deferred, thus leading to a temporary or permanent benefit.
If your business has tax losses, these can be offset against profits in the previous year or profits still to be made during the next nine years. The possibility of offsetting the loss expires after nine years (“loss expiry”). Meijburg & Co has extensive experience in avoiding the expiry of corporate tax losses.
The Corporate Income Tax Act 1969 also includes various other arrangements that provide credits or additional deductions for investments in business assets, in particular if these are energy efficient or environmentally friendly. If you have recently invested in business assets or if you are planning to do so, you may be able to make use of these favorable tax rules. In addition, there are tax incentives for the restructuring of your business, such as the creation of a structure separating the operating activities from the property, a so-called ‘Opco/Propco structure’. Such structures enable the company to focus entirely on its core business, whether this involves the provision of hotel business services or the management of real estate, and also allow companies to attract outside investors. If you are considering restructuring your business, we would like to discuss with you how your company can make use of such incentives.