The extra benefit with the Energy Investment Allowance (EIA)

The extra benefit with the Energy Investment Allowance (EIA)

The Energy Investment Allowance (EIA) is, especially for entrepreneurs. When you switch to LED lighting with your company, you invest in energy-saving assets and sustainable energy. This reduces your energy costs and you also contribute to reducing the climate problem. A true win-win situation.
As an entrepreneur, with the Energy Investment Allowance (EIA) you can claim additional benefits when switching to energy-saving assets. The EIA is a tax arrangement whereby the government supports entrepreneurs in switching to energy-saving assets and sustainable energy. The EIA scheme ensures that you can deduct 45% of the investment costs of energy-saving assets from the taxable profit, in addition to your usual depreciation. As a result, you pay less income or corporation tax.

To whom does the EIA apply?

You are eligible for the Energy Investment Allowance if you are the owner of a company and you are liable for income tax or corporation tax. For example, limited liability companies, limited liability companies, cooperatives, and some foundations and associations are subject to corporation tax. For the foundations and associations, the EIA can only be invoked if the investment has been made in the part of the activities that are considered a fiscal enterprise.
For income tax, you have to think of the sole trader or general partnership (VOF). Are you a freelancer and not sure whether you are an entrepreneur for income tax purposes? Then do the Ondernemerscheck of the Tax Authorities.

Your company must be located in the Netherlands, Aruba, Curaçao, Sint Maarten or the BES islands (Bonaire, Sint Eustatius, and Saba). Investments in Aruba, Curaçao, Sint Maarten or the BES islands must be allocated to a permanent establishment on these islands. It is required that global income be taxed in the Netherlands and that the requirements in the EIA scheme are met.

Individuals, associations or foundations that are not liable for corporation tax cannot use the EIA. Educational institutions are also not eligible for the Energy Investment Allowance. For schools that want to contribute to sustainability, municipalities and provinces regularly take incentive measures such as subsidies, funds and sustainability loans. For any subsidies or funds, it is, therefore, best to inquire with your municipality or province.

How does the EIA work?

For the EIA you must invest at least € 2,500 in a business asset that meets the requirements of the Energy List of the Energy Investment Allowance scheme. Later in this blog, you can read which LED operating assets are eligible for the EIA.

When you make an investment, you must report this digitally via RVO.nl within 3 months of the investment. You will then receive a statement if your investment qualifies for the EIA. This statement also states the amount that is eligible for the EIA. Make sure you keep this statement with your accounting. If you state the Energy Investment Allowance in accordance with the declaration of the RVO in your income or corporate tax return, you may deduct it from the taxable profit. The deduction is 45% of the investment amount for which you have received an EIA statement.
  Below is a calculation example:

The taxable profit of your company in 2019 is € 75,000. The corporation tax is 19% for the first bracket up to € 200,000 and 25% above € 200,000.

For € 5,000 you make new investments in energy-efficient LED lamps.
The EIA amounts to 45% of € 5,000, which is € 2,250. Your taxable profit after deduction of the energy investment allowance will be € 72,750 (€ 75,000 - 2,250). Without EIA you pay € 14,250 in corporation tax. With EIA you only pay € 13,822.50 in corporation tax. Your tax benefit is € 427.50.

What costs can you take with you for the EIA?

The EIA applies to the costs of operating assets that meet the energy performance requirements. This also applies to provisions that are technically necessary for these assets, such as pipes and measuring and control equipment. For these assets, the purchase price, assembly costs or labor costs for installing the new assets are eligible. If you cannot settle the sales tax, the invoiced sales tax also falls under the heading 'purchase sum'.

Maintenance costs and costs for assets that have been used before are not eligible for the Energy Investment Allowance.

Do you receive a subsidy for investing in the new business asset through another scheme? Then you must deduct that subsidy amount from the purchase costs.

Which LED products are eligible for the EIA?

Not all LED lighting is immediately eligible for the EIA. As a main rule, you can assume that LED lighting systems must have a minimum of 100 lumens per watt of light output. Products that fall under this are High Lumen LED panels and High Bay LED lamps. LED fluorescent tubes must have a minimum of 130 lumens per watt of light output. In the specifications of our products, you can see whether the lamps are EIA compliant.  The RVO

its special calculation tool allows you to quickly see at a glance the amount per business asset that you can report to the RVO for the Energy Investment Allowance.
Click here for more about LED lights.

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