Year-end points of action

As the year-end is approaching rapidly, it is a good moment to assess whether any actions need to be taken before or just after year-end.

Here are a few pointers from a corporation tax point of view:

  • Re-investment reserve: the capital gain on the disposal of an asset can be rolled-over to a new investment, within 3 years after the year of disposal. If no re-investment takes place in time, the capital gain becomes subject to tax. Do you need to re-invest in 2012?
  • For many investments an investment deduction can be obtained. Should any of such assets be sold within 5 years after the beginning of the year of acquisition, the deduction is taken back. Please check if any planned disposals need to be lifted over year-end to ensure they are outside the 5 year period.
  • Thin capitalization rules: although the thin cap rules will be abolished as per 1-1-2013, they are still applicable in 2012. The calculation is based on the average debt and equity position per 1-1-2012 and per 31-12-2012. Therefore, it may still be beneficial to convert loans into equity before year end.
  • Tax losses: the tax losses from the year 2003 cannot be utilized anymore after 31-12-2012. Should you have such losses, it should be analyzed if it is possible to create taxable profit in 2012, e.g. by selling assets with capital gains within the group.
  • These are just a few examples of the issues that may be relevant in your situation. This list is by no means exhaustive. Please contact your local Baker Tilly Berk advisor to discuss if there are any opportunities in your situation.