No energy-saving investment credit for intra-group transfer of a plant | Deloitte


No energy-saving investment credit for intra-group transfer of a plant

The Dutch Supreme Court ruled that obligations vis-à-vis an associated company do not qualify for the energy-saving investment credit.

27 June 2017

Dutch version

Energy-saving investment credit

The objective of the Dutch energy-saving investment credit (energie-investeringsaftrek, EIA) is to encourage investments in low-energy techniques and sustainable energy. This tax scheme provides a financial benefit to entrepreneurs who make certain low-energy investments. A number of conditions should be met to qualify for this tax credit. One of them is that the asset should not have been used before. Moreover, taxpayers must notify the Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland, RVO) within three months after they contracted an investment obligation. The Dutch Supreme Court recently ruled on the right to the investment credit for an intra-group transfer of a plant.

Cogeneration plant

X BV and Y BV together form a fiscal unity with X BV as the parent company. At the end of 2008, X BV contracted an obligation to invest in a cogeneration plant. This investment in principle qualifies for the energy-saving investment credit. However, the investment was not notified to the RVO within three months after it was contracted. As a result, X BV was not entitled to the credit. Mid 2009 Y BV was deconsolidated from the fiscal unity. The cogeneration plant was then transferred to Y BV, and the investment was notified within three months. In its 2009 corporate income tax return, Y BV claimed an energy-saving investment credit of EUR 468,776.

The inspector argued that Y BV was not entitled to the investment credit since it involves an obligation contracted vis-à-vis an associated company, so the law does not permit the tax credit. However, the law provides for the opportunity to refrain from applying this provision and the conditions for invoking this exception are set out in a policy decision. This decision shows that the tax credit can still be claimed if the capital item was not an asset in the group before. The Inspector argued that this condition is not met.

Bona fide situation

The Court of Appeal agreed with the Inspector that the conditions set out in the policy decision are not met. After all, the capital item had already been an asset at the level of X BV. Still the court argued that the interested party is entitled to the investment credit. In this context the court considered that the selling company did not claim the credit and that this involves a bona fide situation. The court also considered that this situation is very similar to a sale-and-lease-back transaction, which entitles to application of the tax credit (sale-and-lease-back is a transaction in which the owner sells an asset and then leases it back for a long term).

Affiliated companies

Yet the Supreme Court ruled just the opposite and judged that obligations contracted vis-à-vis an associated company do not qualify for the energy-saving investment credit. Other than the Court of Appeal assumed, there is no ground to still grant the tax credit for situations that are not provided for in the policy decision. The fact that the tax credit is only claimed once and that this involves a bona fide situation did not change this conclusion. On top of that, the Supreme Court argued that the present situation cannot be put on a par with a sale-and-lease-back transaction. So the conclusion for the interested party is that no energy saving investment credit can be claimed.

Source: Dutch Supreme Court, June 23, 2017, 16/01064, ECLI:NL:HR:2017:1133

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