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A company has enquired whether an insurance compensation payment should be recognised in full under the accrual principle or proportionally as a grant. The Directorate General for Taxes (DGT) has ruled that it must be recognised in the period in which the right to receive it is established, unless the requirements for instalment transactions are met.
This ruling clarifies the timing of tax recognition for insurance payouts, preventing companies from deferring income through grant-style proportional recognition unless specific instalment criteria are satisfied.
The tax team reviews your specific situation.
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