The fact that the private limited company is paying does not necessarily mean that the investment was made by the private limited company.
This is decided by the District Court of The Hague in a case in which a private limited company includes in its corporation tax return a write-down of €250,000 against its profits in connection with a worthless investment in crypto-tokens.
Tokens
In 2018, the shareholder/director of the private limited company entered into a so-called “token agreement” with a company based in the United Arab Emirates. Subsequently, €250,000 was paid from the BV’s bank account for the purchase of SRXIO tokens. These tokens were recognised as an investment on the BV’s balance sheet as at 31 December 2018. In the 2019 corporation tax return, a write-down of €250,000 on this investment is charged against the private limited company’s profit.
Private investment
The Court finds that this constitutes a private investment. The agreement to purchase the tokens was signed by the shareholder/director, and there is no evidence to suggest that this was done at the company’s expense and risk. The fact that the purchase price was paid from a bank account held by the private limited company does not alter this. The same applies to the way in which this was accounted for in the company’s annual accounts. Under civil law, the investment was made privately. The Tax and Customs Administration was correct to amend the 2019 corporation tax return on this point.
It is noteworthy that the Tax and Customs Administration included a profit distribution of €250,000 in the shareholder/director’s 2018 income tax assessment, to which the shareholder/director raised no objection.