Netherlands

NL-9:Fiscal schemes for environmentally-friendly investment: MIA and Vamil

Policy Description

The MIA and Vamil schemes are intended to stimulate the investment in environmentally friendly investment by businesses and entrepreneurs. The schemes provide an incentive to choose the least polluting alternative when an investment is made. All businesses and entrepreneurs paying income or corporate tax in the Netherlands are eligible to participate in the MIA and/or Vamil schemes for the technologies listed on the ‘Environmental List’.

Description

The  Environmental Investment Deduction scheme - known as "MIA" -  offers a tax deduction of a share of the environmentally friendly investment costs [1].

The Random Deductions for Environmental Investments scheme  - known as "Vamil" - provides voluntary depreciation on environmentally friendly investment, i.e. the investor can decide when to write off the investment costs. The Vamil scheme offers liquidity (cash flow) and interest advantages to investors [1].

The MIA and Vamil schemes are intended to stimulate the investment in environmentally friendly investment by businesses and entrepreneurs. The schemes provide an incentive to choose the least polluting alternative when an investment is made. All businesses and entrepreneurs paying income or corporate tax in the Netherlands are eligible to participate in the MIA and/or Vamil schemes. Eligible technologies are listed on the ‘Environmental List’ drawn up by the Ministry of Infrastructure and Environment and is updated annually (only available in Dutch) [2].

The MIA provides a one-off immediate tax deduction on a capital asset, whereas the Vamil provides flexibility in the timeframe that investments are deducted from income statements. With the MIA scheme, up to 36% of the investment costs may be deducted from the business’ profit (*1). The voluntary depreciation through the Vamil scheme is limited to 75% of the investments costs for investments made in 2011 to 2013. However, as of 2014 there is no longer a limitation, meaning that 100% of the costs of the investment can be depreciated (*2).

The minimum investment is € 2,300 for VAMIL and €450 for MIA. Investments must relate to the acquisition costs of the capital asset, i.e. the capital asset cannot be used beforehand and other costs, e.g. for consultancy or advisory services related to the asset, are not covered.

Examples of measures that are on the ‘Environmental List’ include:

  • Flameless thermal incinerator for flue gasses;
  • Air emission reduction provision for existing combustion plants;
  • Plasma convertor for gaseous pollutants
  • Boiler with low-NOx pre-burner
  • Transformer with vegetable oil

Each year an updated ‘Environmental List’ is released, which contains technologies and products that cause less environmental damage or are in advance of the minimum standards. The 2012 Environmental List contains 360 items. Businesses can propose and submit a new item for the list to NL Agency. To be included on the list, an environmental investment should at least:

  • Provide an obvious environmental benefit,
  • Be innovative or must still have a small market share in relation to the alternative,
  • Be more expensive than the environmentally unfriendly alternative.

Both schemes have separate annual budgets. Once budgets are depleted, applications are no longer accepted. For 2012, €101 million is available for the MIA scheme and €24 million is available for the Vamil scheme.

The MIA scheme cannot be combined with the Energy Investment Allowance (EIA, see NL-7) as both provide a similar tax deduction possibility (with the MIA focusing on environmental technologies and the EIA on energy efficient technologies). The Vamil can be combined with either the MIA or the EIA as it merely provides flexibility in when a company can depreciate the investment.

Manufacturing companies apply for both the MIA and Vamil scheme to AgentschapNL (NL Agency) (*3) within three months of the investment. AgentschapNL is responsible for technical eligibility. The Dutch Tax office is responsible for financial eligibility of applications to the schemes,assessment of eligibility is carried out during regular tax returns.

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic

Position in the Pyramid

About Us

Participation: Voluntary

Period

Start Date: 1991

Policy Linkages

Supports Long-term Agreement on Energy Efficiency for EU ETS enterprises (LEE) Effort Defining
Supports Long-Term Agreements on Energy Efficiency Effort Defining
Complements Energy Investment Allowance (EIA) Supporting Measure

Agencies Responsible

Ministry of Infrastructure and the Environment
Ministry of Finance
AgentschapNL

Primary Objective: Other (environmental)

Objective

The aim of both the MIA and the Vamil is to encourage Dutch entrepreneurs to invest in their business operations in an environmentally friendly way

Target Group

All companies

Driver of energy consumption or emissions affected by policy: Technology Implementation Rate

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

Environmentally-friendly technologies on the Environmental List. Other technologies can be considered but must be verified by AgentschapNL (NL agency) to qualify for the fiscal incentives.

Quantitative Target? no

Progress Monitored? yes

Verification Required? no

Enforced? no

Sanctions: None

Requirements on the Target Group

  • To receive the incentive, companies must purchase new assets or equipment on the Environmental List and must report these within three months of purchase to AgentschapNL
  • Other technologies can be considered but must be verified by AgentschapNL (NL agency) to qualify for the fiscal incentives.
  • Companies cannot combine the MIA scheme with the EIA scheme.

Support by Government

'’Environmental List’ of eligible capital assets  (Dutch only)  available at http://www.agentschapnl.nl/programmas-regelingen/milieulijst

Implementation Toolbox

'’Environmental List’ of eligible capital assets  (Dutch only)  available at http://www.agentschapnl.nl/programmas-regelingen/milieulijst

Complexity of Implementation

Government

Requires only a check on eligibility of measures against an existing environmental list

Target Group

Environmental list of eligible capital assets available.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions ­ Over the evaluation period 2000-2004: 34,430 applications with a submitted investment of €3,670 million for the MIA scheme 75,705 applications with a submitted investment of €3,870 million for the Vamil scheme The majority (about 90%) of MIA and Vamil applications reflect investments from SME, especially agriculture and horticulture. [3] ­Improved transition of environmentally friendly or less polluting technologies to market feasibility comparable to less environmentally friendly alternatives
Estimated costs/benefits for industry N/A N/A
Estimated cost for government Over the period 2002-2004 costs for government amounted to about 1.7% of the budget. [3] The MIA and Vamil budget are not always fully depleted: ­2008: MIA €86 million of which €45,4 million used. Vamil: €38 million of which €21,3 million used. 2009: MIA €89 million of which €53,9 million used. Vamil: €79 million of which €24,8 million used. ­2010: MIA €113 million of which €123 million used. Vamil: €42 million of which €52 million used. ­2011: MIA €101 million of which €63 million used. Vamil: €24 million of which €36 million used.

References & Footnotes

References

[1] AgentschapNL (2012). Tax relief scheme for environmentally friendly investment (MIA and Vamil). Available at http://www.agentschapnl.nl/nl/node/100318

[2] AgentschapNL (2011). Tax relief on investment that really does make an environmental difference. Available at http://www.agentschapnl.nl/sites/default/files/bijlagen/English%20.pdf

[3] VROM (2007). Evaluatie MIA, Vamil en Groen Beleggen 2000-2004. (English: Evaluation of the MIA, Vamil and Green Investment schemes 2000-2004)

Footnotes

(*1) For example, under the MIA: My profit is €50,000 and I pay 20% tax on this profit. I invest €30.000 in a technology of which I am allowed to deduct 27% according to the environmental list. This is 30.000*0.27= €8.100. My profit for taxes will then be 50.000-8.100 = 41.900, so I pay 41.900*20% = €8380 on taxes. Without MIA I would pay 50.000*20% = €10.000 on taxes.

(*2) For example, under the Vamil: I invest €40.000 in a technology that I can use for 10 years and will have no remaining value after this period. Regular depreciation will be 40.000/10 = €4.000 a year. Vamil allows 75% of the investment (=€30.000) to be randomly deducted. I can choose to deduct 30.000 at once, or deduct 10,000 over 3 years. The 25% (=10,000) remaining has to be deducted conventionally, e.g. 10 years €1,000.

(*3) AgentSchapNL (NL Agency) is a government policy agency for energy, patents, innovation, environment, climate change and international business.