You are allowed to delay using up your reinvestment reserve (HIR). As a rule, an untouched HIR is to be released into the profit within three years. But as the corona crises constitutes a ‘special circumstance’, the entire reinvestment may be somewhat delayed. Storing the book profit in a HIR will allow you to defer the taxes on the amount. Of course, there are conditions attached (see infographic). One of these conditions is that the HIR must have been spent within three years of being set aside. This can only be deviated from if the reinvestment really requires more time or is delayed due to ‘special circumstances’. The Dutch government has now explicitly determined that the corona crisis is such a ‘special circumstance’. Therefore, the HIR no longer needs to be released directly into the profit after three years. The State Secretary of Finance has stated, however, that the other conditions for the HIR will continue to apply. But he promised earlier that the Belastingdienst will deal generously with entrepreneurs who claim to fall under the exception.
Conditions for setting aside a HIR
To be allowed to set aside a HIR, you need to meet the following four conditions:
- You or your privately held corporation (bv) must intend to reinvest. You will have to make this plausible.
- After the new asset is charged against the HIR, it’s book value may not be less than the book value of the sold asset.
- An asset written off in more than ten years (real estate) will have to be replaced by an asset with the same economic function (with the exception of government intervention).
- If you fail to reinvest within three years, the reserve will have to be released and taxed.