On 8 August 2012, the Ministry of Finance published its Budget proposal for 2013. Details of the proposed tax measures are summarized as follows:

Corporate taxation:

• Introducing a tax incentive for R&D costs
• Doubling the depreciation rates for some industrial investments
• Introducing a general limitation on the deductibility of interest expenses
• Introducing a special deduction for training and education costs

Individual taxation:

• Suspending the automatic adjustments made annually to the tax brackets. No adjustments will be made between the tax years 2013 and 2014.
• Introducing a new tax bracket for earned income above €100,000. Tax on the amount would be €18,719 and the rate on excess, 31.75%.
• Introducing surtax on large pensions.
• Increasing the credit granted to low- and medium-income earners for national income tax purposes and the basic allowance for municipal tax purposes.
• Limiting the maximum exempt compensation for using a personal car for work-related travel.
• Limiting the deductibility of voluntary pension insurance premiums and contributions to qualifying long-term savings schemes by increasing the age limit, after which the beneficiary may at the earliest receive the benefits, to 68 years (currently 63 years).
• Continuing to decrease the deductible portion of mortgage interest to 80% in tax year 2013.
• Introducing two temporary tax incentives for individuals investing in non-listed growth companies:
  • Under the one, a taxpayer would receive a tax credit
  • Under the other, the taxpayer would be entitled to use a maximum presumed acquisition cost of 50% (normally 20% and 40% for assets held for 10 years or longer) of the sale price
• Introducing, temporarily, a new tax bracket on inheritance and gifts exceeding €1m for inheritance and gift tax purposes.
• Abolishing the gift tax exemption for payment of a maximum of €8,500 insurance capital.

©copyright IBFD. This article is part of a selection of daily news from the IBFD Tax News Service (TNS) chosen by Ernst & Young professionals. All rights to the content reside with IBFD. Any use requires IBFD’s prior permission in writing. IBFD´s disclaimer applies to any and all of IBFD’s articles and publications.