In our article Vpb exemption for foundation and association We describe how this exemption works in the case of a foundation that was established less than five years ago.
Time-proportional threshold
A similar case was recently heard at The Hague District Court case The matter at hand concerns a foundation established in 2015. This foundation submits corporation tax returns to the Tax and Customs Administration. A taxable amount of €43,702 was declared for 2015. For 2016, there was a loss of €40,763.
With reference to the ruling of the Leeuwarden Court of Appeal, which we discuss in our aforementioned article, the court concludes that the corporation tax exemption cannot be applied in 2015. After all, the profit exceeds the annual threshold for the exemption of €15,000. The five-year threshold of €75,000 must be applied on a pro rata basis and therefore amounts to 1/5 * €75,000 = €15,000.
Waiving the exemption
The exemption does apply for 2016. The loss means that neither the annual threshold nor the pro rata threshold (2/5 * €75,000 = €30,000) is met. However, the exemption stipulates that the profit for a loss-making year is set at zero.
In view of the possibility of applying the rules on loss set-off, the foundation may choose not to apply the corporation tax exemption. In that case, the loss for 2016 is set at €40,763. This loss is then set off against the profit for 2015, and the majority of the corporation tax paid for 2015 will be refunded.
No request
However, the court ruled that the foundation had NOT made a request to waive the application of the exemption. Simply stating the loss in the 2016 corporation tax return does not, in fact, constitute such a request. This request should have been made in writing, separately from the return, and no later than the date of submission of that return (this deadline has since been extended to a decision (extended until the date on which the corporation tax assessment becomes final).
The court has reached this decision because a period of (at least) five years applies to the withdrawal of the exemption. The Tax and Customs Administration sets out the withdrawal of the exemption in a decision. The foundation may only revoke this after five years.