A housing association forms a tax provision for future maintenance of its housing complexes. The inspector argues that this is only allowed if the maintenance expenditure in a year is substantially higher than average: the so-called peak requirement. If the expenditure spreads evenly over the years, there is no justification for a provision, according to the inspector. The housing association disagrees. Does a peak requirement apply to a maintenance provision?<\/p>\n
A housing association owns more than 33,000 rental units spread over about 600 complexes. In its 2016 corporate income tax return, it includes a maintenance provision of \u20ac143 million. The inspector corrects the full amount. The parties take their dispute to court and agree that the provision is \u20ac54 million if no peak requirement applies and virtually nil if it does.<\/p>\n
The inspector argues that a maintenance provision should only be created if the future expenses differ substantially from the average annual maintenance costs. He bases this on a 1980 Supreme Court ruling on the cost equalisation reserve. There it is stipulated that such a reserve may be formed for maintenance not leading to annual expenditure, provided it is relatively significant. According to the inspector, this criterion also applies to the maintenance provision.<\/p>\n
The court held that a maintenance provision is not subject to a peak requirement. According to the Brick judgment, a provision may be formed if the expenditure originates in facts prior to the balance sheet date, it can be attributed to that period and will occur with a reasonable degree of certainty. The Baksteen judgment provides no evidence of a peak requirement.<\/p>\n
The 1980 ruling relied on by the inspector concerned the cost equalisation reserve and not the maintenance provision. A cost equalisation reserve is equity for tax purposes, based on a statutory provision and aimed at equalising costs. A provision, on the other hand, is loan capital, based on good commercial practice and aimed at allocating expenses to the years in which they belong. Both are not comparable phenomena. The court confirmed that only the criteria from the Brick judgment apply to a tax maintenance provision: origin, allocation and certainty. A peak requirement is not at issue. A provision may also be formed if maintenance expenditure is spread evenly over the years. The inspector can appeal this ruling to the Supreme Court.<\/p>\n
A housing association forms a tax provision for future maintenance of its<\/p>","protected":false},"author":2,"featured_media":3917,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3916","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts\/3916","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/comments?post=3916"}],"version-history":[{"count":0,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts\/3916\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/media\/3917"}],"wp:attachment":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/media?parent=3916"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/categories?post=3916"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/tags?post=3916"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}