Does your organization invest in CO2 reduction, energy-efficient technologies and sustainable energy? Then you may qualify for the Energy Investment Allowance (EIA). The EIA is an attractive fiscal scheme that encourages entrepreneurs to invest in energy-saving or sustainable assets. In addition to reducing your energy consumption and emissions, you also benefit from tax advantages. But which assets are eligible for the EIA and what are the conditions for an investment to qualify for the EIA?
When does the EIA apply?
You can use the EIA for investments made in The Netherlands in assets or technologies that are energy-efficient and/or save CO2. The EIA applies to assets listed on the so-called Energy List. This is an annually updated list of techniques and devices that save energy or generate sustainable energy. The energy list consists of two categories:
- Generic assets: general techniques applicable in many sectors, such as LED lighting, heat pumps, or solar panels.
- Specific assets: include techniques that can only be used in certain sectors or situations, such as a biomass gasifier, a cogeneration plant or a wind turbine.
What are the conditions of the EIA?
To qualify for the EIA an investment must meet several conditions:
- The asset must be new and not previously used.
- The asset must cost at least 2,500 euro.
- The asset must also be reported to the Dutch Enterprise Agency (RVO) within three months of entering into the investment obligation.
- The asset must meet the technical requirements listed on the energy list.
It should be noted that the Environmental Investment Allowance (MIA) and the discretionary depreciation (VAMIL) have their own environmental list. There is some overlap with the EIA and the benefits differ from the EIA. Note: you cannot apply for both the MIA and EIA for the same investment!
How much benefit does it provide you?
The EIA reduces taxable result and thus the tax burden, resulting in a shorter payback period for the investment. Additionally, the investment leads to a lower energy bill and a smaller ecological footprint. So, the EIA is beneficial for both your wallet and the environment.
The amount of the EIA depends on the percentage applicable to the asset. With the EIA your tax benefit for qualifying investments can be up to 40 percent of the investment amount. The percentage is determined annually by the government and may therefore change.
Calculation example for 2024:
Suppose you make an investment of 1,000,000 euro in energy-saving technologies and qualify for the EIA. With a deduction percentage of 40 percent, you can deduct 400,000 euro from your taxable profit. This means you pay 103,200 euro less tax for 2024 with a (maximum) corporate tax rate of 25.8 percent!
How do I apply for EIA?
To apply the EIA you must:
- Report your investment to RVO.nl within three months of entering into the obligations. You do this via the eLoket with your eHerkenning.
- You will then receive confirmation that you must keep with your administration.
- Then you declare the EIA in your income tax or corporate tax return.
- The Dutch Tax Administration will then decide on your declaration and may seek advice from RVO.nl.
Need advice?
Of course, Grant Thornton is here to provide you with more information or to support you in the possible application of the EIA. Would you like to know more about the possibilities of sustainable investments? Our specialists are happy to explore the possibilities with you to make your company more sustainable and achieve attractive tax incentives. They are also happy to assist you in cashing in on the right investment facilities in your tax return.
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