Housing associations and Meijburg & Co
Housing associations play an important social role. They offer in the region of 2.4 million households a solid and affordable roof over their heads, and they invest in social real estate and in numerous social projects. In carrying out their work, they are confronted with a maze of rules and regulations from the Ministries of Housing, Spatial Planning and Environment (“VROM”) and Finance (“MvF”), the Sheltered Employment Act (“SEA”), and the Public Housing Central Fund (“PHCF”). Even tax legislation for housing associations has undergone several changes over the past years. The corporate income tax exemption was initially replaced by a limited liability to corporate income tax, which then became full liability. Included in these measures was a tax on problem neighborhoods and proposals were made to amend the housing association system thoroughly. Recently, for example, the favorable policy on the integration levy of VAT was also abolished. Furthermore, the sector has faced intense scrutiny from the media, politicians, and public opinion.
Housing Associations and Meijburg & Co's Real Estate Group tax lawyers
There are far-reaching developments taking place in the taxation of and around housing associations. For a long time, housing associations have been dealing with VAT, real estate transfer tax, payroll tax and social security contributions, and local authority taxes, which include the Valuation of Immoveable Property (“WOZ”) valuations. With the introduction of the limited liability for corporate income tax in 2006 and the full liability for corporate income tax in 2008, the sector has finally reached tax maturity. This means a huge increase in tax and administrative obligations for housing associations. Another consequence is the increased attention they will have to pay to matters of tax. These are becoming more complex and comprehensive and are, moreover, constantly liable to change. Meijburg & Co's Real Estate Group tax lawyers can offer support to housing associations in various areas of taxation.
What can Meijburg & Co do for your association?
Meijburg & Co would be delighted to provide your association with advice on tax and tax-related matters. Within the Meijburg & Co Real Estate Group, there are specialists with extensive knowledge, experience, and expertise on all aspects of tax.
- Real estate development: VAT and real estate transfer tax
Our advice aims to reduce, to the greatest extent possible, the VAT and real estate transfer tax burden that raises the cost price in the whole process, from the drawing board to sale or lease of the properties. Tax planning begins from the moment you decide to acquire a piece of land, or decide to enter into a joint working agreement with a local authority or any other partner. Meijburg & Co can also provide your housing association with specially tailored “Tax and project development” training.
- Optimizing VAT
A lot of housing associations do more than just rent property. Consider the leasing and development of commercial real estate, or the activities that are related to the housing associations' social role. Providing assisted living and other additional services to tenants, and collaborating on the security of the residential environment are just some of these activities. It is essential to optimize your housing association's VAT position in engaging in these activities. A VAT quick scan, for example, could demonstrate rapidly where your housing association's opportunities and chances lie, as well as revealing where the risks occur.
The rules for payroll tax and social security contribution, social insurance, and salary administration change every year. We would be delighted to keep you informed. As with VAT, a quick scan in this area would offer a quick and accurate picture of your housing association's tax position. You could use the results to make improvements to, for example, the terms and conditions of employment package, for example, could be made.
- Compliance and audit
Introducing the liability to this tax means that housing associations are now obliged to file a corporate income tax return. A number of further agreements between the Dutch Revenue and the housing associations on the scope and details of the liability to tax are contained in the determination agreements VSO1 and VSO2. Nearly all of the housing associations have signed these agreements. The next step is to embed corporate income tax in both the organization and the administration. KPMG Meijburg can offer you assistance in a number of ways. You could consider our assistance in designing the tax administration, as well as in establishing and assessing the tax positions.
- Corporate income tax advice
A lot of work needs to be done on the housing associations' liability to corporate income tax. Corporate income tax is an expenditure for housing associations which means that there are less resources available to devote directly to public housing.Meijburg & Co's tax lawyers can advise you on how you can minimize the corporate income tax burden. In many cases, our clients are able to reduce their corporate income tax burden, after consultation. You could consider making the best use of mixed projects, applying investment facilities, forming adequate provisions and tax reserves, writing down lower-than-average investment returns (if necessary), justifying the maintenance expenditure, and planning with regard to loss set-off. We can also provide corporate income tax advice on any structures for non-core activities.
- Local Authority taxes and WOZ
Local government taxes and levies can be very steep if your association owns a substantial number of properties. This is the case for municipal property taxes.Establishing the correct WOZ value is, therefore, very important. Our advisors look at this value very critically. If we see an opportunity to lower this value, we can either discuss this with the municipality, or challenge the WOZ value through the objection and appeal procedure, on your behalf.
- Horizontal supervision and the Tax Control Framework
Board members, supervisory agencies, stakeholders, auditors, and other interested parties are increasingly devoting their attention to taxes and tax risks. They expect even the housing associations to manage their own tax risks. The Dutch Revenue's introduction of horizontal supervision has further increased the relevance of tax-risk management, at an increasingly rapid rate. An integrated Tax Control Framework enables you to manage your tax risks and avail yourself of tax opportunities. It can also be used to demonstrate that, as far as tax is concerned, you are in control.
We have built up extensive experience in implementing Tax Control Frameworks within housing associations. Meijburg & Co, in collaboration with the Governance, Risk Management & Compliance software supplier Ba-PRO, has developed an application for structuring your Tax Control Framework: Ta-PRO, Meijburg & Co’s solution for your Tax Control Framework. This unique software is the outcome of our extensive experience in tax matters and with tax risk management, combined with the Ba-Pro's professionals' equally long-standing experience with risk management software. We can also assist you in implementing a Tax Control Framework with your own software, should that be required.
Do you have any questions? Do you need advice? If so, then please contact our advisor in the Housing Associations group. You will find the contact details below. Of course, you are also welcome to approach your regular Meijburg & Co contact.