Arnhem-Leeuwarden Court of Appeal has ruled that the involvement of a private limited company owned by the children has little real practical or economic significance.
Restructuring
The case concerns an interested party and her husband, who hold shares in a holding company. This holding company holds the shares in an operating company, which (among other things) owns property.
A reorganisation took place in 2007:
- The property is transferred by the operating company to the interested party and his wife;
- The shares in the operating private limited company are in the form of certificates, and these share certificates are held by the (5) children of the interested party and her husband (the children’s ages range from 15 to 28). The interested party and her husband are the directors of the trust company (STAK);
Werk-BV lets most of the property to third parties for parties and events. The interested party and the Tax and Customs Administration agree that the letting is for business purposes. Holding-BV has the right to provide catering services on behalf of Werk-BV for these parties and events. A small proportion of the property is let to Holding-BV.
Availability Scheme
The Tax and Customs Administration takes the view that the interested party and her spouse must declare the income from the property, which has formed part of their private assets since 2007, in Box 1 under the ‘making available’ scheme. This applies where the property is made available to a private limited company in which the owners of the property hold a substantial interest. Following the restructuring, the taxpayer and her husband hold a substantial interest in Holding-BV, but no longer in Werk-BV. This is because the share certificates in Werk-BV are then held by the children. The taxpayer and her husband therefore take the view that the property should be taxed under Box 3 rather than Box 1.
Actual meaning
The Court considers it plausible that the interested party and her husband are, in practice, making the property available to (their own) Holding-BV. The Court reaches this conclusion on the basis of the following circumstances:
- As directors of STAK, the interested party and her husband exercise control over Werk-BV;
- Werk-BV did not employ any staff and hires staff from Holding-BV for all its activities;
- Holding-BV is entitled to provide catering services on behalf of Werk-BV, in return for a fee amounting to a specified percentage of the turnover generated by Werk-BV;
- Werk-BV may only outsource the catering to a third party with the consent of Holding-BV, subject to payment of a fee to Holding-BV;
- Since 2007, Werk-BV has incurred a structural loss every year (with the exception of one year);
- Holding-BV has issued a letter of commitment to Werk-BV, under which Holding-BV will continue to provide financial support to Werk-BV;
- The actual situation following the restructuring differs very little from the actual situation prior to the restructuring.
Furthermore, the Court infers from the parliamentary history of the secondment scheme that the term “secondment” should be interpreted broadly and that, in doing so, a economic approach applies. The Court quotes the following passage from the parliamentary explanatory notes: “… this wording has been chosen to ensure that the application of the supply scheme cannot be circumvented merely by the involvement of a third party. This requires a substantive assessment of the extent to which there are two entirely different economic relationships, or whether the third party is in fact no more than an intermediary, so that the economic interest actually lies with the taxpayer.”.