Doing Business in the Netherlands 2012 - American Chamber of ...

Doing Business in the Netherlands 2012
regardless of the probable outcome. A modification of the method
used is allowed only if it is justified by sound business practice.
Sound business practice is not defined by law. The Supreme Court
has held that a method of computing annual taxable profits is in
compliance with sound business practice if it is based on generally
accepted accounting principles concerning the proper method of
determining profits. A method of computing annual taxable profits is
deemed not in compliance with sound business practice only if its
application is found incompatible with explicit statutory provisions.
A Dutch taxpayer may, upon prior request and subject to certain
conditions, calculate its taxable income using a functional currency.
This allows Dutch taxpayers to eliminate currency exchange risks for
tax purposes.
The CITA 1969 contains certain limitations on the annual depreciation
of assets. A specific limitation of annual depreciation applies to real
estate, disallowing depreciation below (50% of) the WOZ-value
(value for the purposes of the Valuation of Immovable Property Act).
The WOZ-value is determined by local tax authorities every other
year for municipal real estate tax purposes and resembles an estimate
of the fair market value. With respect to the valuation of inventory,
there is considerable freedom in adopting a suitable system as long as
it is in accordance with sound business practice. Furthermore, a
temporary measure has been introduced for certain qualifying assets
that have been acquired in 2009, 2010 and 2011, allowing Dutch
companies to depreciate these assets at a maximum rate of 50% per
annum.
The period for the carry forward and the carry back possibility of tax
losses is nine years and one year, respectively. Reference is made to
section 18.10 Losses of this chapter for more information on this
topic.
Baker & McKenzie 163