The Dutch government intends to reduce greenhouse gas emissions by 49% in 2030, compared to the 1990 levels. Furthermore, the government aims to reduce carbon emissions by 95% in 2050. The energy transition – e.g. the transition from fossil fuel to fully sustainable resources – plays an important role in achieving the various levels of reduction. The experts at HVK Stevens are fully equipped to optimize the tax position of your sustainable investments, such as wind farms.
The fiscal position of the investment
Corporate income tax
It is common for shareholders to grant wind farms several loans in different phases. The interest rate on each loan can be subject to various conditions. The interest payment, for example, can depend on e.g. the wind production or the EBITDA. In order to determine its cash flow, these wind farms require certainty on whether these (profit sharing) interest payments are deductible from the wind farm’s taxable profit. The experts at HVK Stevens can advise you on these matters. In this respect, it is essential to understand when and how pre-completion revenues and depreciation must be processed for tax purposes. In order to provide shareholders and banks with as much certainty as possible, we recommend discussing these items with the Dutch Tax Authorities in advance and obtain a ruling.
VAT and Real Estate Transfer Tax
In addition to corporate income tax, VAT and real estate transfer tax are important taxes to factor in as well. The supply of generated electricity to the grid qualifies as an economic activity for VAT purposes, thus giving the wind farm the right to reclaim so-called input VAT. If the wind farm is entitled to deduct input VAT during the construction phase, the wind farm can decide to submit monthly VAT returns rather than quarterly VAT returns. This will allow the wind farm to receive input VAT more rapidly.
If the wind turbines are transferred to another group company e.g. post project completion, the transfer may be subject to real estate transfer tax. Our experts can provide you with a suitable solution.
Tax deduction facilities for sustainable investments
Companies that invest in environmentally friendly and/or energy efficient assets may avail of additional tax deductions. By applying the environmental investment deduction (MIA), whether or not in combination with random depreciation of environmental investments (Vamil), or the energy investment deduction (EIA), up to 45.5% of the investment costs may be deducted from its taxable profits. In order to avail of the MIA/Vamil or the EIA, that specific asset must be listed on the Environmental List 2022 respectively the Energy List 2022. We are happy to help you determine if you can claim these tax deductions and increase your cash flow.
The fiscal position of the shareholders
It is also common to allow citizens in the vicinity of the wind farm to participate while ensuring that the investors are in complete control. The experts at HVK Stevens are ready to assist you in designing the most suitable tax structure for you and other stakeholders.