A later tax loss may still belong economically to the years before a BV changed hands.
The shares transfer on Friday. The purchase price is paid, the notary completes the deed, and everyone turns to Monday’s business. Yet one figure remains unsettled: an asset still sits in the tax books at a value above what it was worth on the transfer date.
Two years later, the asset is sold and the loss enters the corporate tax return. By then, the directors may have changed, the adviser may have moved on, and the valuation assumptions may rest in an old deal folder. The cash expectation, however, is very current.
A buyer who expected tax relief may find that the loss cannot be used as planned. That is the practical weight of the Supreme Court’s September 2026 ruling on Article 20a of the Corporate Income Tax Act 1969.
The rule against trading in loss-making companies can also reach losses realised after an ownership change. The question is whether their economic cause already existed before that change.
The balance sheet has a memory
Article 20a can restrict loss carry-forward when the ultimate interest in a corporate taxpayer changes by 30 per cent or more. The legislation includes exceptions and tests concerning the company’s assets and activities. It also permits assets to be revalued up to their economic value immediately before loss relief becomes restricted.
The recent case concerned a company with thirteen rented offices and an industrial building. Third parties acquired its shares on 23 December 2015. At least three properties already had an economic value below their fiscal book values.
The company transferred those three properties in 2017. Their combined fiscal book value was €17.13 million, against a transfer price of €12.84 million. After the release of reserved costs, the company reported a fiscal loss of €4,296,591.
The Supreme Court confirmed the point in ECLI:NL:HR:2026:1431. Article 20a can restrict a later loss where the facts and circumstances behind it predate the ownership change. The tax entry came in 2017. The fall in value was already present in 2015.
Anyone who has worked with Dutch company accounts will recognise the distinction. Fiscal recognition, commercial reporting and economic reality do not always arrive together. The ledger records a permitted moment. The business may have absorbed the loss much earlier.
Price depends on usable relief
A tax loss is sometimes treated in a transaction as a voucher with a fixed cash value. It is not. Its value depends on future profit, the applicable law, ownership history, activities and the conditions the company must meet.
For a small buyer, the difference can be material. An acquisition model may assume that an embedded property loss will reduce corporate tax during profitable years. If Article 20a restricts that relief, tax payments rise against the model. Less cash remains for loan repayments, maintenance, staff or dividends.
The seller faces the same issue from the other side. A tax position that the buyer cannot use should not quietly support a higher price. It may also shape warranties, disclosures and the way both parties describe the company’s tax assets.
This is where tax work becomes governance work. What value is included in today’s price, and what cash and management consequences follow after the former owners have left?
The question reaches beyond property. Similar value gaps can arise in machinery, receivables, software, licences and other intellectual property. A product may lose customers before its development costs are fiscally recognised as impaired. A specialised machine may remain in the books above its realistic sale value.
The legal principle begins in tax law. Its pressure reaches the whole transaction.
A group view can hide the company
Dutch groups often manage cash, tax forecasts and reporting through one consolidated picture. That is understandable. It can also obscure the company that owns the asset and carries the exposure.
Belastingdienst guidance explains that specified Article 20a tests within a fiscal unity apply as if the fiscal unity did not exist. Each relevant company needs its own assessment. Where the restriction does not apply, loss set-off may still take place at fiscal-unity level.
That distinction matters in modest groups as much as in large ones. One BV may own the premises, another may employ the staff, and a third may hold financing receivables. A single acquisition model can easily blur those roles.
The character and use of each material asset at the ownership-change date can influence the analysis. For property intended for rental to unrelated parties, Belastingdienst guidance treats intended use as important, including during redevelopment before the first tenant arrives.
Valuation, planning documents and the ownership timeline therefore belong in the same conversation. A property is not merely a number on a consolidated balance sheet. It has an owner, a purpose and a history.
Preserve the business story
The useful response is not more paper for its own sake. It is a business story that still holds together while the people who know it are present.
Around a planned or recent share transfer, the important comparison is between material fiscal book values and supportable economic values. Appraisals, budgets, board minutes, financing correspondence and due-diligence papers carry weight when they describe the same commercial reality.
Within a fiscal unity, that story also needs to show which company owns each asset and conducts each activity. The group may report as one. Article 20a can bring attention back to the individual BV.
Friday closing remains important, but it is not always the end of the matter. A later tax return may depend on what management knew about an asset that morning and how clearly it recorded that judgment.
The strongest tax position is rarely the most elaborate one. It is the position in which price, records, decisions and economic reality still agree when someone asks the question years later.
If a share transfer involves embedded losses, align the valuation, tax analysis and transaction record before closing.
The data, sourcing, and analysis behind this article were conducted by Linda Pavan Geraedts. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Linda Pavan Geraedts before publication.
References
- HR: beperking verliesverrekening treft ook latente verliezen
- Wettenbank - Article 20a Wet Vpb legal framework
- Parket bij de Hoge Raad - Latent losses in the Article 20a litigation
- Gerechtshof Amsterdam - Lower-court route and the shift from formal to economic loss timing
- Belastingdienst Kennisgroepen - Fiscal unity and entity-level Article 20a testing
- Belastingdienst Kennisgroepen - Investment test and operating group assets
- Belastingdienst Kennisgroepen - Property intended for third-party rental
- Belastingdienst
