Alliander’s tax and subsidy matters
Alliander takes great trouble to meet all its legal obligations with regard to tax and subsidies, both on time and in full. Based partly on the dialogue and cooperation with our stakeholders (both inside and outside the company), we have adopted the following principles with regard to all our activities relating to tax and subsidies:
“We are a bona fide taxpaying company that makes a fair contribution to society through the tax which it pays.”
To this end, we have set ourselves the following goals:
To be compliant with all primary and secondary legislation relating to tax and subsidies both at home and abroad.
To be transparent concerning the tax payments we make in our financial reporting, such as in the financial statements.
We are totally transparent vis-à-vis internal and external stakeholders with regard to all relevant files relating to tax and subsidies. Stakeholders include the Dutch Tax & Customs Administration, the Netherlands Enterprise Agency (Dutch acronym: RVO), the Supervisory Board, the Management Board and internal departments such as Human Resources, Regulation, Risk Management, Legal Affairs and Internal Audit.
We make an active contribution to tax awareness and culture within Alliander through targeted briefing and, where necessary, directives. As a taxpaying company, Alliander is liable for various taxes, chief among which are corporate income tax, wage tax and VAT. The following chart outlines the main cash flows.
Prudent management of tax risks
Obviously, Alliander always acts within the bounds of primary and secondary legislation. The driver for operations will never be purely tax considerations. Where there is any doubt about the interpretation of tax law we engage in advance in a constructive and transparent dialogue with the Dutch Tax & Customs Administration (and with the RVO where subsidies are concerned). This is entirely in line with the Enforcement Covenant entered into with the Tax & Customs Administration under the ‘Horizontal Supervision’ arrangements and echoes the general principle of compliance already alluded to. The implementation of our tax strategy also reflects Alliander’s risk management model and the Tax Control Framework is used in the mitigation of risk.
Current tax-related developments
In November 2010, Alliander issued a subordinated perpetual bond loan with a nominal value of €500 million. In the closing two months of 2013, this subordinated perpetual bond loan was redeemed. Under IFRS, an instrument of this kind qualifies as equity. It was assumed that the periodic payments made to the holders of the bonds issued in 2010 would count as deductible interest expense for the purposes of corporate income tax.
To date no agreement has been reached with the Dutch Tax & Customs Administration concerning the tax treatment of these loans. In the ongoing appeal proceedings, the Arnhem Court of Appeal upheld Alliander’s case. The tax authority is seeking to have this ruling overturned. As at year-end 2018, the total maximum exposure for Alliander including interest was €38 million.
Considered approach to grant applications
As a large corporation, we also have a responsible approach when it comes to subsidy schemes. We do a lot of innovative work, especially in the context of the energy transition. Various schemes are available for this kind of activity, at international level, at national level and at regional level. We focus on grants that are intended for large corporations rather than those for regional activities. We recognise our responsibility in this area and, at regional level, deliberately leave the field open for other companies to develop smaller sustainability initiatives by only applying for such grants where appropriate.