Taxable incorporation into a Dutch BV: changes to retroactive effect

Up to three months of retroactive effect

Taxable incorporation, known as ruisende inbreng, involves settling tax on the transfer of the business. On written application, the transition from income tax to corporate income tax may take effect up to three months before the preliminary agreement. A unilateral declaration of intent may be used under the same conditions. Retroactive effect is not automatic: the tax inspector decides on the application in writing. These rules differ from those for tax-neutral incorporation.

Registration ends, but registered delivery is required

The separate requirement to register the declaration of intent has been removed. The filing procedure has changed instead. The application and preliminary agreement must be sent by registered post with the prescribed cover form. Submission should take place as soon as possible and no later than when filing the income tax return for the year in which the retroactive period begins. Keep the declaration, application and evidence of dispatch and receipt together. Removing registration does not remove the need to apply.

No incidental tax advantage

Retroactive effect must not produce an incidental tax advantage. The decision clarifies that this includes a one-off receipt of €100,000 or more during the proposed retroactive period. Other circumstances can also fall within the restriction: this amount is not a general safe harbour. Review exceptional income and planned transactions before choosing a transfer date.

Watch the incorporation and transfer deadline

The BV must be incorporated within nine months after the start of the retroactive period, and the business transfer must also occur within that period. Income tax reliefs for entrepreneurs cannot be claimed for the retroactive period. The information supplied must be complete and accurate, and both the BV and the taxpayer must accept the conditions in writing. The former deadline for receipt of that acceptance has been removed, but the acceptance itself is still required.

Start with a practical timetable

Identify the intended transfer date, expected profit, exceptional income and available documentation. Coordinate the tax timetable with the notarial incorporation and actual transfer. Choosing a BV requires more than comparing tax rates: the owner’s position and business funding also deserve attention.

Oudshoorn considers the restructuring as a whole, helping you establish which approach fits and which actions need to be completed by each deadline.

More information from Oudshoorn

• Restructuring and business transfers
• Tax advice