16-06-2020

Corporate income tax and corona

Corporate income tax and corona

Do you expect profits for 2020 to be lower than expected due to the corona crisis? The so-called corona reserve in corporate income tax makes it possible to deduct the expected loss 2020 related to corona already in 2019. If you have a Dutch company (BV) that is incurring losses, a fiscal unity for corporate income tax purposes may also provide.

The corona reserve in corporate income tax

Many companies achieved a good result in 2019 and therefor have to pay corporate income tax on this profit. The loss they expect to incur in 2020 cannot yet be offset (via carry back) against the profit for 2019 on the basis of current legislation. This can only be done in the course of 2021. In a nutshell, the liquidity advantage is delayed for another year.

Example

Profit

Tax
2019€ 400,000€ 88,000
2020- € 500,000

zero


After the declaration for 2020 (in 2021 or later) has been definitively determined, € 88,000 can be recovered via carry back. Upon request, a provisional refund can be requested immediately after the submission of the 2020 declaration.

New regulation
Under the new regulation, you may deduct the expected loss for 2020, insofar as this is related to the corona crisis, from the 2019 taxable income. This is achieved by forming a so-called corona reserve. This reserve must not exceed your 2019 profit. After the reserve has been formed, you can request a further (lower) provisional assessment for 2019 which will lead to a refund. In this example, therefore, the € 88,000 can be reclaimed on short notice if you have completed the declaration for 2019.

Fiscal unit corporate tax

Many entrepreneurs have several BV’s. Under conditions it is possible that these BV’s form a fiscal unity for the corporate tax. An advantage of a fiscal unity is that you can set off profits and losses between the mutual BV and shift assets without tax consequences. The direct compensation of profits and losses is nowadays profitable, this in order to prevent that within a group one of the companies still needs to pay taxes and the other cannot offset the losses fully in the same year.

However, there are also disadvantages to a fiscal unity. For example, as a fiscal entity, you can only use the first bracket of corporate income tax once, taken over a tax year (16.5% in 2020, taken over the first € 200,000). Another disadvantage is that the BV included in the fiscal unity are all jointly and severally liable for corporate income tax debts that arise in the period of the fiscal unity. Whether or not it is fiscally advantageous to opt for a fiscal unity for corporate income tax purposes during this period depends on various factors. Our advisers can provide you with insight into the possible advantages and disadvantages of a fiscal unity for your companies.

How can we help you?

It is only natural that you, as an entrepreneur, are now faced with a number of questions. At KroeseWevers we have various specialists who are ready to support and advise you on ways and possibilities to keep your company as financially healthy as possible in the coming period. Please contact us. We are happy to help you.

Corporate income tax and corona
Would you like more information? Please feel free to contact us.
908 A3050 bewerkt
mr. Hans Eppink
Director of Tax Advice
Send an email +31 (0)5 70 21 93 46
More information? +31 (0)53 850 49 00
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