The Supreme Court has ruled that bonuses paid to staff at subsidiaries that have been sold are deductible from profits.
The case concerns a private limited company (BV) which sold its three subsidiaries for €30 million in 2015. Following the sale, the BV paid a total of €1.5 million in bonuses to the staff of the sold subsidiaries. The private limited company deducts these (wage) costs from its profit. The Tax and Customs Administration disagrees and argues that these constitute selling costs falling under the participation exemption (and are therefore non-deductible).
The Supreme Court has ruled that the bonuses do not constitute costs relating to the sale of the shareholding. Costs are covered by the participation exemption where there is a link between that cost item and the acquisition or disposal of the shareholding. And this must be a direct causal link: without the acquisition or disposal of the shareholding in question, the costs would not have been incurred.
It is true that the costs relating to the bonuses would not have been incurred had the shareholdings not been disposed of, but they did not, in any way, contribute to the disposal taking place. Rather, the award of the bonuses is a consequence of the disposal of the shareholdings, as the proceeds from the sale made it possible to pay the bonuses.