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New definition of the housing corporations’ area of responsibilities
In 2004, the Dutch Minister of Housing, Planning and the Environment announced an amendment to the Social Housing Management Decree. As a consequence of this amendment, which should become effective in the first half of 2005, housing corporations will have to distinguish in future between activities for the corporation’s account – the core activities – and those that should be hived off to a subsidiary (or commercial activities).
The Minister announced that activities relating to building houses (both for sale and rental, the construction cost of the latter exceeding a certain limit), must be carried out by a subsidiary in future. This subsidiary must be either a private limited company (B.V.) or a PLC (N.V.) under Dutch law. This would imply that the housing corporation needs to incorporate one or more subsidiaries for certain activities or that the Articles of Association of existing subsidiaries must be amended. The new Decree will enforce certain specific requirements with regard to the substance of the Articles of Association of such subsidiary.
According to the Minister, the housing corporation itself will be exempt from corporation tax for its core activities, whereas the subsidiary will not enjoy such benefits. The subsidiary will be allowed to carry out any activities which the housing corporation can carry out, but will in that case not be exempt from corporation tax.
The Ministry believes at present – February 2005 – that the new Decree can still be brought in by 1 July 2005. Whether or not a housing corporation’s commercial operations need be accommodated in a private limited company or PLC is still under review.
For more information on this subject, please contact Natascha Geraedts
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