Corporate income tax for educational institutions

With effect from 1 January 2016, the Corporate Income Tax Act 1969 includes two exemptions relating to education. The law contains a subjective and objective education exemption. But what is the difference and when do you apply which tax?

The subjective and objective education exemption

The objective education exemption means that profits from educational activities are not taken into account. This must concern education that is funded for at least 70% from public funds.

A body is subjectively exempted under the education exemption when it exclusively or almost exclusively (i.e. for at least 90%) teaches or conducts research. However, this education and research must be funded mainly (i.e. for at least 70%) from public funds. As these exemptions are still fairly new, much is still unclear about the interpretation of the conditions.

Corporate income tax liability for activities other than education

In practice, we regularly see educational institutions carrying out other activities in addition to the educational activities referred to in the law. Examples include the rental of (gym) halls, the secondment of staff and the sale of books. In that context, it is important to have a clear picture as to whether or not these activities are performed in an enterprise from a tax point of view. If one or more activities are used to run a business, there may be a (partial) corporate income tax liability. These 'other' activities may also prevent the subjective exemption from being invoked.

Want to know more?

Would you like to know more about corporate income tax for your educational institution? Please contact Marieke van Kooten by e-mail or by telephone: +31 (0)88 277 22 64 or Netty van Kreveld by e-mail or by telephone: +31 (0)88 277 10 22. They will be happy to help you.