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Written by:
Nico Koppel


Calculation of KIA allowance in joint venture context

The KIA (small-scale investment allowance) scheme is available in principle for use by businesses that invest in operating assets, the level of the KIA allowance being proportionate to the level of the investment in question. A minimum of 2,400 euros in capital expenditure applies, over and above which the KIA allowance is calculated as 28 percent of the actual amount in capital expenditure up to the level of 58,238 euros. A fixed KIA allowance of 16,307 euros applies from this point onwards, with the proviso that the KIA rate is reduced by 7.56 percent for the surplus – if any – from 107,848 euros to 323,544 euros in capital expenditure, the latter amount representing the cap on eligibility for the KIA scheme.

The Supreme Court of the Netherlands in a string of rulings has addressed the level of the KIA allowance to be made available to businesses that operate in a joint venture context, commenting that each of the partners in such a joint venture is deemed in a tax sense to be carrying on its own enterprise. The operating profit is calculated per individual partner, as is the KIA allowance. Due consideration is to be given in all of this to the calculation of the KIA allowance for any particular partner having to be based on the sum total of investments by the joint venture as a whole, as a requirement which has been introduced with the aim of preventing the KIA allowance to be made available to the various businesses that make up the joint venture turning out greater than the KIA allowance for a sole tradership or private limited-liability company having committed itself to a similar amount in capital expenditure, with the KIA allowance rate for the participants in the joint venture being defined in this scenario as if the joint venture were carried on at the expense of just the one tax payer.

It should be noted that the KIA allowance from the 2010 Tax Plan onwards has no longer been uniquely expressed as a percentage of the amount in capital expenditure, the Supreme Court in an earlier ruling in a case involving a KIA allowance collected by a business that formed part of a joint venture and had made additional investments of its own alongside the investments made by the joint venture having stipulated that an intermediate step was called for – said step not being provided for in current legislation – in so far as the investment amount contributed by the business itself did not come under the bandwidth of the amount in own investments augmented by the investments made by the other participants in the joint venture. According to the Supreme Court, the calculation of the investment allowance recapture should involve the amount in KIA allowance that corresponds with the aggregate investment volume being expressed as a percentage thereof.

The method outlined above is identical to the one which the Supreme Court applied in a case involving a partner in a general partnership or “vennootschap onder firma” (v.o.f.), as it is known in Dutch. The capital expenditure the general partnership in question had committed itself to in 2016 had totalled 119,385 euros, the corresponding KIA allowance amounting to 15,687 euros less 7.56 percent of (119,385 euros less 103,748 euros equals) 14,504 euros. As the partner in question had refrained from making any investments in non-partnership (operating) assets in 2016, his KIA allowance for the year had thus turned out at (14,504/119,384 x 59,692.50 euros or) 7,252 euros.

Dutch version: Berekening KIA bij samenwerkingsverband

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