Investing in sustainability can provide you with a nice tax advantage when you’re an entrepreneur. You can make use of the Environmental investment deduction (MIA) or the Arbitrary depreciation environmental investments (Vamil). In many cases these two schemes can also be combined. In this blog we explain how this works.
What exactly is a sustainable investment?
Investing in sustainability is purchasing a business asset that is on the Environmental List. This list is updated annually and describes each environmentally friendly asset with a code and requirements. The code of each asset determines whether it qualifies for the MIA, Vamil or both and for what percentage.
The environment list includes, for example, business assets such as an electric cargo or moped, but environmentally friendly modifications to your business premises may also qualify for the MIA / Vamil. Are you planning to make an investment and do you want to know if it is on the environment list? You can find this list on the RVO website.
Environmental investment deduction
The MIA is an additional deduction from your profit, which can amount to 45% of the invested amount. You can deduct this amount from your profit. This way you’ll pay less income tax.
The code of the business asset therefore determines exactly how much you can deduct. An electric cargo bike, for example, has code A. For this asset, you can apply the full 45% of MIA and also use the Vamil!
Arbitrary depreciation of environmental investments
With the Vamil scheme you have the option of arbitrarily depreciating 75% of the investment amount. Normally you have to spread these costs over a period of 5 years, but when applying the Vamil you can do this when it’s most beneficial for your company. For example in a year when your profit is very high. To apply the scheme(s), the investment in the business asset must be at least € 2,500. It must also be a product that has not been used before. By the way, does the business asset also meet the conditions of the small-scale investment allowance (KIA)? Then you can apply that on top of the other schemes. This way you have a double benefit.
The investment has been made, what next?
Make sure to submit a report to the RVO within 3 months of purchasing the business asset. You’ll receive a confirmation from them that must be kept in your administration. After this, the MIA and/or Vamil may be applied in your declaration and you can enjoy the benefit!
