Dutch taxpayers may use funds obtained by the sale of fixed assets to accrue a reserve for reinvestment, which would neutralize the P/L impact of the asset sale income. However, an appropriate investment budget approved at senior executive level to spend those funds must exist as well as supporting documentation (e.g. letter of intent or purchase order)

Example:

Subject of business of Real Estate BV is the aquisition, the exploitation management and the resale of real estate property. In 1991 the company bought a real estate to generate rental income. In 1997 one of the flats within the real estate will be sold . The company accrued a re-investment reserve at value of the sales income gained from the sold flat in order to aquire a replacing facility. It did appear that the domestic tax inspector was not really happy with this accrual.   According to a a decision determined by the Dutch Supreme Court in The hague, if appropriate evidence is given, that the funds obtained from the asset sale are supposed to be used in a replacement purchase, the transaction may be neutralized in the P/L and therefor not to be considered as subject  of  income tax computation. (published at the supreme court 8th of Januari 2008, BK-06/00245.

It is to be mentioned that the time to realize the replacement purchase need to be within reason, otherwise the accrual would require P/L impacting release.