If you want to place investment assets in a BV, preferably do so just before the turn of the year. The reason to place your assets in a BV is to avoid the high income tax levy in box 3. See our article “Box 3 in 2017: you can still limit the damage“. You may increase the year numbers by 1. Then the article fits the 2017/2018 situation just fine. Indeed, the 2018 tax plans contain no changes in this regard.
Instead of a limited company, you can also avoid box 3 completely legally with a open fund on joint account (OFGR).
Box 3: reference date
The tax base for box 3 is determined on 1 January each year. Therefore, to avoid the box 3 levy, you have to contribute the investment assets to the BV (or to the OFGR) before 1 January.
Because in the BV and OFGR, the return actually earned from the investment assets is taxed, it is advantageous to effect the contribution as close to the turn of the year as possible.
Fraus legis
The Zeeland-West Brabant District Court recently ruled that the contribution of investment assets on 31 December 2012 did not involve fraus legis. Fraus legis is the legal word for abuse of right.
The case concerns a 79-year-old, who incorporates a limited liability company at the end of 2012 and deposits €1,500,000 in share premium therein. This amount is deposited into a notary's quality account on 31 December 2012. From that account, the notary deposits the amount into the BV's bank account on 21 January 2013.
According to the Inland Revenue, the deposited amount was still part of the box 3 base on 1 January 2013. The Tax Office gives two arguments for this:
- the amount actually still belongs to the interested party's assets;
- the incorporation of a limited company by a 79-year-old person and depositing shortly before the box 3 assessment date had the sole purpose of evading the imposition of income tax in box 3 (aka: abuse of rights).
The court rightly cut these arguments short. By depositing on the notary's quality scheme, with instructions to transfer the full amount as share premium, it no longer belonged to the 79-year-old's estate.
And the legislator has deliberately chosen a single reference date system for box 3. Part of that system are rules that the so-called “box hopping” should be prevented. Box hopping refers to the withdrawal of assets from box 3 just before the reference date that return to box 3 shortly after the reference date.
Contribution company
If you want to bring a company into a BV in a silent manner, 1 October is a deadline. The contribution may work backwards for tax purposes to 1 January if a letter of intent or preliminary agreement is registered with the tax authorities before 1 October. This date has now passed, but a new year is coming, with new opportunities.