{"id":773,"date":"2019-04-11T05:45:09","date_gmt":"2019-04-11T03:45:09","guid":{"rendered":"https:\/\/vwg.nl\/uncategorized\/doorberekenen-van-kosten-niet-altijd-zakelijk\/"},"modified":"2026-03-03T10:33:30","modified_gmt":"2026-03-03T09:33:30","slug":"passing-on-costs-not-always-businesslike","status":"publish","type":"post","link":"https:\/\/vwg.nl\/en\/doorberekenen-van-kosten-niet-altijd-zakelijk\/","title":{"rendered":"Passing on costs not always businesslike"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-6683\" src=\"https:\/\/vwg.nl\/wp-content\/uploads\/20190411_Doorberekende-kosten.jpg\" alt=\"\" width=\"1200\" height=\"628\" \/><\/p>\n<p>It regularly happens that companies pass on costs to each other. Such was the case in a recent <a href=\"http:\/\/deeplink.rechtspraak.nl\/uitspraak?id=ECLI:NL:RBNHO:2019:2139\" target=\"_blank\" rel=\"noopener noreferrer\">ruling<\/a> From North Holland District Court. A Dutch company structurally overcharges its Indian sister company.<\/p>\n<h4><strong>The ruling<\/strong><\/h4>\n<p>The Dutch company trades in jewellery, watches and jewellery, among other things. The costs recharged by the Indian sister include rent, interest, subcontracted work for purchasing the new collection and courier costs.<\/p>\n<p>After an audit, the inspector corrects the company's profit. He considers that the company has structurally overpaid expenses to its sister company. This is based partly on the argument that the invoices are insufficiently specified.<\/p>\n<p>The company argues that the gross profit percentage achieved in the Netherlands is acceptable and that actual and sufficient tax is levied in India.<\/p>\n<p>The court noted that the company must be able to make a plausible case that:<\/p>\n<ul>\n<li>the expenditure is based on actual quid pro quos;<\/li>\n<li>the costs were incurred entirely for the benefit of the company;<\/li>\n<li>the extent of the costs passed on is at arm's length.<\/li>\n<\/ul>\n<p>The court ruled that the company had made this plausible only for the rental costs and interest. With regard to the other costs, the company's profit is therefore corrected.<\/p>\n<p><strong>Business?<\/strong><\/p>\n<p>In its ruling, the court also reaffirms that costs must always be incurred for the benefit of the company. If this is not the case, the costs are not business expenses. They should then not encumber the company's profit.<\/p>\n<p>Recharging costs in order to reduce profits is obviously not a business reason. Which costs are re-invoiced must be clearly shown in the invoices. An insufficiently itemised invoice may lead to a profit adjustment.<\/p>\n<p><strong>At arm's length<\/strong><\/p>\n<p>The Corporation Tax Act specifically addresses legal relationships between related companies. If related companies have made arrangements in agreements, which differ from what would have been agreed with a third party. profits must be determined as if trading with this third party had taken place. In other words, there should be trading \u201cat arm's length\u201d. Also when passing on costs.<\/p>\n<p>Do you have questions related to cost chargeback? Are the transfer prices you use at arm's length? Or are you asking yourself whether cost recharging is currently going well at your companies?<br \/>\nFeel free to take <a href=\"https:\/\/vwg.nl\/en\/contact\/\" target=\"_blank\" rel=\"noopener noreferrer\">contact<\/a> with us.<\/p>","protected":false},"excerpt":{"rendered":"<p>Geregeld komt het voor dat vennootschappen kosten aan elkaar doorberekenen. Zo ook in een recente uitspraak van Rechtbank Noord-Holland. Een Nederlandse vennootschap betaalt structureel teveel kosten aan haar Indiase zustermaatschappij. De uitspraak De Nederlandse vennootschap handelt onder andere in juweliersartikelen, uurwerken en sieraden. De door de Indiase zuster doorberekende kosten hebben onder meer betrekking op [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-773","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts\/773","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/comments?post=773"}],"version-history":[{"count":1,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts\/773\/revisions"}],"predecessor-version":[{"id":2786,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/posts\/773\/revisions\/2786"}],"wp:attachment":[{"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/media?parent=773"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/categories?post=773"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vwg.nl\/en\/wp-json\/wp\/v2\/tags?post=773"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}