Depreciation restriction for commercial property
The calculation of the operating profit calls for allowances being made for a depreciation restriction where it concerns the value of commercial property, in that depreciation during a particular calendar year is permissible only where the property’s book value exceeds its minimum value (depreciation being capped at the difference between the property’s book and minimum values). The minimum value of a commercial property which is in use with the business owner amounts to 50% of the property’s so-called WOZ value, this being the value for the purposes of the Immovable Property (Valuation) Act of the Netherlands. Both the land and the appurtenances are regarded as forming part of the property. Appurtenances are characteristically associated with and servient to the property without necessarily having to be physically attached thereto.
A District Court case focused on the precise criterion for determining whether a particular structure warranted being treated as an appurtenance, with the Inspector of Taxes taking the view that the structure would have to be associated with, be in use in conjunction with and be servient to the (main) building or buildings and the business owner by contrast arguing that the structure should be servient both proximately and exclusively to the (main) building or buildings.
The District Court affirmed that the legislator when introducing the depreciation restriction for commercial premises had sought to tie in with the owner-occupied depreciation restriction, jurisprudence associated with the homeownership regime having confirmed the Inspector of Taxes as having applied the appropriate criterion, with the proviso that allowances should be made when applying the criterion for the differences between an owner-occupied property and commercial premises.
The proceedings in question involved a farming business whose manure silo, litter pen and bunker silos owing to their location and respective functions all qualified as appurtenances to the commercial premises, as did the metalling applied throughout the yard, according to the District Court.
Dutch version: Afschrijvingsbeperking bedrijfsgebouw