November 10, 2023
What is the Small Project Investment Credit (KIA)?
Are you planning to buy a laptop or a business phone? Then it's useful to take into account the Small Project Investment Credit. By investing, you can gain fiscal advantages. It's essential, however, to make your investments correctly so that you don't miss out on this deduction. In this article, we will explain what the Small Project Investment Credit entails and provide you with tips on how to take advantage of this deduction.
What is the Small Project Investment Credit?
The Small Project Investment Credit (kleinschaligheidsinvesteringsaftrek, KIA, in Dutch) is a deduction for income tax and corporate income tax for entrepreneurs who make investments.
2023: If you invest more than €2600 in a fiscal year in assets in 2023, you can benefit from the KIA. You can deduct 28% of the investment amount. There is also a limit on this deduction. If you invest between €63,717 and €117,991 in 2023, the KIA is €17,481 instead of 28%. If you invest more, the KIA is €17,481 minus 7.56% of the part of the investment amount above €117,991.
2024: In 2024, you can benefit from the KIA starting from an investment amount of €2,849. Also, in 2024, you can deduct 28% of the investment amount. For an investment amount between €69,840 and €129,330, the KIA is €19,555 instead of 28%. If you invest more than €129,330, the KIA is €19,555 minus 7.56% of the part of the investment amount above €129,300.
For example, if you invest €3200 in the year 2023, you are below the limit, and you can deduct €3200 * 0.28 = €896 from your profit.
Which costs count as investments?
In short, only assets with a purchase value above €450 excluding VAT count as investments for the KIA. If you are not entitled to VAT deduction because, for example, you work in healthcare, assets with a purchase value above €450 including VAT count. You can read more about when something is considered an investment in another article of ours.
Assets that do not count for the KIA
There are several investments that do not count for the KIA:
- Cars not intended for professional transport
- Investments in certain assets, such as houses, land, animals, vessels for representational -purposes, securities, claims, goodwill, and public-law permits.
- Assets purchased for use abroad
- Assets used for at least 70% for rental purposes
- Private assets contributed to the business
- Assets bought from family and people within the household
Tips to reach the threshold of €2600 (for the year 2023)
€2600 is a relatively high amount for entrepreneurs. Therefore, we have some tips for you to possibly reach this amount. Firstly, it's useful to plan various investments in one fiscal year. If you spread small investments over several years, you miss out on this additional deduction. For example, if you make three investments of €1000 each in one fiscal year, you exceed €2600 and can benefit from the KIA. If you make these investments in different years, you won't exceed €2600 in any single year, and therefore, you cannot take advantage of the KI
We also have a list of ideas for investments that might help you reach just above €2600:
- Laptop
- Phone
- Earphones/headset/headphones
- Business bicycle
- Keyboard/pen for an iPad (iPad and keyboard count as one investment)
- Software and POS systems
- Desk, office chair, etc. (only for a workspace that meets the conditions)
- Camera
- Website (not in all cases)
The Small Project Investment Credit (KIA) is a deduction for income tax and corporate income tax for entrepreneurs making investments. The KIA is a valuable deduction that you as an entrepreneur certainly want to take advantage of. Therefore, it's crucial to plan your investments wisely and keep an eye on the threshold of €2600 for the year 2023 (€2849 for 2024). It would be a shame if you fall just a few euros short of being able to benefit from the KIA.
