[members-discuss] [ncc-announce] [GM] Voting on the RIPE NCC 2019 Financial Surplus

Dear Nick,

The RIPE NCC states in its Tax Governance Paper (published 10 Jan 2019)
that we are committed to a list of sustainable tax principles: e.g. we
pay taxes promptly and in accordance with applicable regulations and we
have no intention for aggressive tax planning. Because we are a
not-for-profit membership association, the Dutch tax authorities do
allow us to redistribute any excess paid contributions to the membership
and they allow a free accumulation of capital within the Clearing House
Reserves.

This Clearing House arrangement dates back to 1998 and it explains that
the membership can decide on how to allocate the surplus or deficit.
Each year the surplus can either accumulate in a special reserve or it
can be redistributed to the members. This special reserve, known as the
Clearing House, gives the RIPE NCC a stable financial position to
operate soundly and continuously.

The Clearing House structure was amended in 2003 and again in 2014. The
existing structure continues to confirm that the RIPE NCC pays normal
corporate income tax over its financial surplus but with the exception
of the accumulation of capital within the Clearing House investment
portfolio. Any positive returns on our investments can be generated free
of paying taxes (in Dutch this is called “vrijgesteld
ondernemingsvermogen” - "exempted business assets"). If we want to use
the financial surplus to add capital we have to pay taxes, which makes a
lot of sense otherwise society might view this as an industry vehicle to
circumvent paying taxes.

Corporate income tax in the Netherlands has two levels (19% over the
first 200k and on top of that 25%). I will explain the calculations for
the voting options in more detail during my GM presentation.

If you have any more questions, please ask.

Kind regards,

Gwen van Berne
Chief Financial Officer
RIPE NCC

On 10/10/2019 16:51, Nick Hilliard wrote:
> CK,
> 
> can you advise on the tax situation regarding the capital reserve?
> 
> Previously the board stated that the agreement reached with the NL tax
> authorities specified an upper limit in how large the capital reserve
> could be without attracting corporation tax.  Is this a floating limit
> relating to the annual revenue of the organisation, or was/is it a
> static limit?  I.e. do either Options A or B have tax implications that
> we as members should know about?
> 
> Nick
>> Christian Kaufmann <mailto:exec-board at ripe.net>
>> 10 October 2019 at 13:15
>> Dear members,
>>
>> For the upcoming RIPE NCC General Meeting (GM), the Executive Board is
>> proposing three options for the RIPE NCC 2019 financial surplus.
>>
>> The Board feels strongly that this is an appropriate moment to
>> strengthen the RIPE NCC's capital position to make sure that it can
>> continue its work with a solid financial basis in the coming years.
>>
>> Therefore, the Board suggests that the membership vote for the option to
>> add 50% of the financial surplus to the RIPE NCC Clearing House reserves
>> and redistribute 50% to the membership in 2020. This option is a good
>> compromise between adding more capital for improved stability and a
>> predictable redistribution process where we return the financial surplus
>> to our members.
>>
>> Although there are three possible outcomes (the two usual choices and
>> the 50% choice), there are two voting options. This avoids the
>> possibility of all options being rejected and no decision being made on
>> the surplus.
>>
>> Option A (to add 100% to the reserves) is approved if it receives over
>> 50% of Yes votes. Votes for Option B (to add 50% to the reserves) are
>> only considered if Option A does not pass. If both options receive less
>> than 50% of Yes votes, then the entire surplus will be redistributed to
>> the membership in 2020.
>>
>> You can find more information in the supporting document:
>> https://www.ripe.net/participate/meetings/gm/meetings/october-2019/redistribution-of-the-ripe-ncc-2019-financial-surplus.pdf
>>
>> And we encourage all members to register to vote at the upcoming GM:
>> https://www.ripe.net/s/gm-registration-october-2019
>>
>> Regards,
>>
>> Christian Kaufmann
>> RIPE NCC Executive Board Chairman
>>
> 
> 
> 
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