In our previous articles, we have already stressed the importance of the remuneration theory when a company makes a property available to its director, and the need to properly defend this theory to prevent the deductibility of costs related to that property — including depreciation — from being rejected by the tax authorities.
A recent ruling of the Court of Cassation of 22 January 2026 serves as a reminder that these issues go far beyond the mere question of current expenses. This time, it is this very notion that deprives the company of the benefit of the spread taxation of capital gains, with immediate and considerable financial consequences.
When a company realises a capital gain on a fixed asset — whether on the occasion of a disposal, expropriation or casualty loss — that gain is in principle immediately taxable under corporate income tax.
However, the legislature has provided, in Article 47 of the ITC 92, a specific regime of spread taxation. This mechanism has the effect of temporarily neutralising the realised capital gain, provided that the company reinvests the proceeds received in a new depreciable fixed asset dedicated to the professional activity, known as the replacement asset. Once this reinvestment has been made, the taxation of the capital gain is not eliminated but spread over time, at the same rate as the depreciation applied to the asset acquired as replacement. The logic is one of progressive compensation between the taxable capital gain and the deductible depreciation, which neutralise each other year after year, rendering the transaction fiscally neutral.
To benefit from this regime, the asset disposed of must in principle have been held for at least five years. In the specific case of a casualty loss, the five-year holding condition does not apply. The capital gain then corresponds to the difference between the indemnity paid by the insurer and the net fiscal residual value of the destroyed asset.
As for the reinvestment itself, it must be carried out within three years from the end of the taxable period in which the capital gain was realised, a period extended to five years when the reinvestment takes place in a built property. Throughout this period, the capital gain is provisionally exempt and maintained in an unavailable reserve on the balance sheet.
Article 47, §2, of the ITC 92 is explicit: "The reinvestment must take the form of depreciable intangible or tangible fixed assets, used in a Member State of the European Economic Area for the exercise of the professional activity." Two conditions are therefore imposed cumulatively: the asset must be depreciable and dedicated to the professional activity.
The present dispute concerns precisely the compliance with these two cumulative conditions.
A company makes a property available to its manager and his wife for their private use. In return, the manager pays rent recorded in a current account, calculated not on the actual rental value of the property, but on the basis of the flat-rate amounts set out in Article 18 of the RD/ITC 92, which determine the taxable benefit in kind attributed to him.
On 22 March 2015, the property is destroyed by fire. Since the asset was fully depreciated at that date, the indemnity paid by the insurer — €213,705.76 — constitutes in its entirety a taxable capital gain. The company uses this amount to finance the full repair and renovation of the property, and claims the benefit of the spread taxation provided for in Article 47 of the ITC 92.
The tax authorities refuse the application of the regime, considering that the conditions of Article 47 of the ITC 92 were not met. The Ghent Court of Appeal, in its ruling of 14 June 2022, confirms this refusal on the grounds that the replacement asset was not dedicated to the professional activity of the company, but used for exclusively private purposes — namely the personal residence of the manager and his wife.
The company contests this analysis and appeals to the Court of Cassation.
The Ghent Court of Appeal had based its refusal on the absence of a professional character of the replacement asset. The Court of Cassation dismisses this ground by recalling its settled case law: "It follows from the nature of a commercial company that all its assets are necessarily dedicated to its professional activity. The capital gains arising therefrom therefore have a professional character within the meaning of Article 24, first paragraph, 2°, ITC 92."
The justification that the asset would be non-professional cannot therefore be upheld.
However, the Court specifies that: "It does not follow, however, that all its expenses can be deducted as professional expenses. The costs incurred by a company, such as depreciation, are only deductible within the meaning of Article 49 ITC 92 if they meet the conditions imposed by that provision and in particular if those costs are incurred or borne to acquire or preserve taxable income."
By substituting a new legal basis for the erroneous ground retained by the Ghent Court of Appeal, the Court of Cassation confirms the refusal of spread taxation, making an important clarification: while all assets of a company are indeed professional in nature, not all depreciation is therefore deductible.
It recalls that the concept of "depreciable" in Article 47, §2, of the ITC 92 must therefore be understood in the fiscal sense and not the accounting sense. It is not sufficient for an asset to be depreciated in the accounts: the depreciation must also be fiscally admissible. If the depreciation relating to the replacement asset is not fiscally admitted, the spread taxation cannot be applied and the capital gain is therefore immediately taxable. This rule applies not only to assets whose costs are in principle not deductible due to their intrinsic nature, but also to assets whose deductibility is rejected by the tax authorities — in particular, as in this case, on the grounds that the conditions of Article 49 of the ITC 92 are not met.
The Court then validates the factual findings of the Court of Appeal: the property was made available in the personal interest of the manager, the consideration received was calculated on a flat-rate basis intended to avoid the taxation of a benefit in kind, and not to generate taxable income, and no remuneration policy had been demonstrated. The depreciation on this property could therefore not be admitted as professional expenses within the meaning of Article 49 of the ITC 92.
The Court of Cassation definitively anchors the regime of Article 47 of the ITC 92 in the logic of Article 49: without fiscally admissible depreciation on the replacement asset, the conditions for spread taxation are not met and taxation is immediate.
But this ruling also illustrates once again the cascade effects that non-compliance with the remuneration theory can entail, well beyond the simple deductibility of expenses. Insufficient demonstration upstream can, as here, result in the immediate taxation of a capital gain of €213,705.76.
We refer you to our articles dedicated to these questions: Making a property available by a company to its director and Benefits in kind and fiscal deductibility.