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Written by:
Herman Ruijter


Corporation tax liability

Liability for corporation tax in respect of a particular (financial) year applies to corporate bodies by virtue of the law irrespective of whether or not the Tax and Customs Administration has specifically invited the body in question to file its corporate tax return and the body in question has not filed said such a tax return and has not been presented with a corporation tax assessment either. The level of the profit for the year that is liable for corporation tax in the Netherlands too is anchored in the law. Even if the corporate body in question has not reported any profit and has not been presented with a corporation tax assessment, it cannot be regarded as not having realised a taxable profit for the year in question.

In 1999 a company incorporated under the laws of a country other than the Netherlands acquired an immovable property in the Netherlands. The (guilder-denominated) price it paid at the time corresponded with 249,579 euros. In 2008 the company sold the property for 405,000 euros including 5,000 euros for movables. The company in question never filed any corporation tax returns in the Netherlands, and never had any corporation tax assessments issued to it, for the entire period up to and including 2008. The Inspector of Taxes raised an additional corporation tax assessment for 2008 based on a taxable amount of 405,250 euros. Having established that the company in its capacity of domestic tax payer had been liable for corporation tax in 2008, the Court of Appeal for Arnhem-Leeuwarden fixed the book profit on the sale of the property at 206,576 euros, setting the depreciation for the years from 1999 to 2008 at 56,155 euros annually (corresponding with nine times 2.5 percent of the price the company had paid when it acquired the property in 1999).

The Supreme Court went on to throw out as baseless the company’s appeal in cassation against the Court of Appeal’s ruling. The ownership of the immovable property, the Supreme Court argued, had enabled operating profit to accrue to the company since 1999, which had rendered it liable for corporation tax. The Supreme Court referred to the system of valuation at cost as advocated by the company as being inconsistent with proper business practice given that it did not allow for regular wear and tear, and decided that the Court of Appeal had been correct in factoring in the depreciation when calculating the book profit.

Dutch version: Belastingplicht vennootschapsbelasting

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