Reinvestment reserve: deferring tax after selling a business asset
Written by Ilias Aarrass6 min read · Published on · Last reviewed on 
In short
Sell an asset above book value and you may put the book profit in a reinvestment reserve, then deduct it from a new investment within 3 years of the year you formed it.
- The condition is a demonstrable intention to reinvest at balance date; record it with quotations or an investment plan.
- For assets not depreciated or depreciated over more than ten years, such as land and buildings, the replacement must serve the same economic function.
- The write-down may not push the new asset's book value below that of the sold asset at the moment of sale.
- If you do not reinvest in time, the reserve is released and the book profit is taxed at once after all.
You depreciate business assets, but reality ignores your schedule. A van carried at 5,000 euros in the books sometimes fetches double on sale. That difference, the book profit, counts as profit and is taxed, precisely in the year you probably must buy a replacement. For that situation there is the reinvestment reserve: you park the book profit and write it off against your next investment. Not cancellation, but deferral, and at the right moment that saves a lot of liquidity.
How the reserve works
Selling an asset above book value, you may place the book profit in a reinvestment reserve instead of adding it to profit. The condition is an intention, at balance date, to reinvest in another asset. When you then buy something new, you deduct the reserve from its purchase price: the new asset enters the balance sheet lower and you depreciate less. You still pay the tax, but spread over the depreciation years rather than at once.
The rules of the game
The reserve has a few hard conditions:
- Reinvestment intention: you must plausibly show you plan to invest again. Record it with quotations, emails or an investment plan.
- Deadline: reinvestment must happen by the end of the third year after the sale year. Fail and the reserve is released, taxed at once after all.
- Book value floor: the write-down may not push the new asset's book value below that of the asset sold.
- Same-function rule: if you sell an asset that is not depreciated or depreciated over more than ten years, like land or a building, the reserve may only go to a replacement with the same economic function. It works the other way too: a reserve from selling a van cannot be written off against such a long-lived asset. Between shorter-lived assets, vans, machines, fixtures, that rule does not apply.
Worked example: van sold, new van bought
This is how it plays out in the most common case:
Worked example: shifting € 7,000 of book profit
- Sale proceeds of the old van
- € 12,000
- Book value of the old van
- € 5,000
- Book profit, into the reserve
- € 7,000
- New van € 30,000, less the reserve
- book value € 23,000
Result: No tax on the € 7,000 in the sale year. You depreciate € 23,000 instead of € 30,000, so later profits come out slightly higher: deferral, neatly spread
If the reinvestment falls through
If your plan changes, the tax outcome changes with it. Abandon the intention and the reserve is released in the year that happens. If by the end of the third year after the sale no reinvestment has occurred, release is mandatory, unless the delay is beyond your control in a process already under way. And if you cease your business entirely or sell it with goodwill, the reserve is settled as part of the cessation profit. So actively track the deadline; three years is shorter than it feels.
Frequently asked questions
Does the reserve also apply to damage or theft?
Yes. If compensation for a lost asset exceeds its book value, you may reserve the difference in the same way for the replacement.
Can I offset the reserve against several smaller investments?
Yes, the reserve need not go to one replacement. You may offset it against several assets purchased within the window, respecting the book value floor per asset.
Does this also work for my bv?
Yes, the reinvestment reserve exists in both income tax and corporate tax and works essentially the same.
Does the write-down affect the investment deduction?
It can. The write-down lowers your depreciation base and can affect schemes like the small-scale investment deduction. Have the combination calculated before applying the reserve to a major purchase.
Must I report the reserve separately?
The reserve appears as a separate item on your tax balance sheet and flows through your profit return. Ensure your records track which sale each reserve stems from and when its three-year window closes; see also depreciation.
Sources
- Reinvestment reserve: conditions and deadlineBelastingdienst · belastingdienst.nl
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This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
