Tax Court rules on depreciation of comm. real estate
The tax depreciation on commercial real estate have been subject to the scrutiny of the Dutch Revenue for already a number of years. Although studies show that the Dutch practice (that allows a straight line depreciation of buildings during the economic life thereof) is not more generous than that in other EU countries, the Dutch ministry of Finance has made various attempts to limit or disallow depreciations on commercial real estate.
On 1 September 2004 this discussion appears to be decided in favour of the real estate investors. The Higher Tax Court of Amsterdam decided that investors can continue to use the possibilities to amortise their investment notwithstanding the historic fact that real estate has proven to be an investment that does not reduce in value. The (expected) increase in value of the land should – according to the court – not have a limiting effect on the depreciation of the building.
The court decision is no final verdict, however, in this dispute. The Ministry of Finance announced it will seek a decision from the Dutch Supreme Court in this case.
