Discontinuing your sole tradership? Don’t wait any longer!
This month’s theme: if you are in the process of discontinuing your sole tradership, make sure that the profit on cessation of operations has been transferred to your annuity account no later than by the 30th of June!
If you are in the process of winding up your sole tradership or general partnership or are adopting private limited-liability status for your business operations, you have the option under current legislation for a term of up to six months of the end of the year of suspension of the current business operations to transfer the cessation profit to an annuity account administered by an external insurance company or by your own company (including where the latter is under incorporation). Exemption is available up to a particular maximum, which in most cases amounts to € 113,569, for cessation profits paid into such an annuity account. Any deposits over and above the maximum are liable for income tax.
You will be taxed on the payments under the annuity contract once the latter has passed its due date. As the periodic payment you have saved up for will be paid out to you in multiple instalments, you may well be taxed on the payments at a reduced rate compared with that at the time you realised the tax saving, which will put you ahead in a fiscal sense. You could in fact realise a tax saving of as much as 52% in income tax at the moment you annuitise your cessation profit.
Your Koppel consultant is champing at the bit to clue you in on the annuitisation of cessation profits, so contact him or her today!
Dutch version: Staakt u uw eenmanszaak?