The legislative proposal of October 16, 2015, to amend the Dutch fiscal unity regime has been adopted and enters into force as from December 9, 2016. The amended Dutch fiscal unity regime allows the formation of a corporate tax fiscal unity between Dutch entities that are connected through one or more EU-entities.
In addition to the ordinary direct parent-subsidiary situations, a Dutch fiscal unity may also be formed between parent companies and sub-subsidiaries with an EU intermediary company, between sister companies with the same EU parent company or in situations combining the two aforementioned. In practice, this was already possible based on a Decree by the Dutch Ministry of Finance published in December 2014. The possibility to form a fiscal unity between Dutch entities connected through one or more EU-entities is now formally implemented in Dutch law.
How does this affect your business?
If your company contains Dutch entities or permanent establishments it might be beneficial to include these Dutch entities or permanent establishments into a fiscal unity. All entities in a fiscal unity may together file a single Dutch tax return for corporate income tax purposes as a single entity. All individual profits and losses of the fiscal unity companies are consolidated. Furthermore, the new fiscal unity regime also includes several anti-abuse measures, such as preventing a fiscal unity from taking a loss into account twice. These anti-abuse measures also apply for fiscal unities that have been formed under the aforementioned Decree.
On 12th of June 2014, the European Court of Justice found the Dutch fiscal unity regime in breach of the European freedom of establishment. The European Court of Justice based this decision on the fact that the Dutch fiscal unity regime did not provide for an option to form a fiscal unity between Dutch entities that are linked through an European entity, whereas Dutch companies that are directly linked through other Dutch companies can form a fiscal unity (provided that all Dutch linking companies also entered into the fiscal unity). As a response to this and in anticipation of a legislative proposal, the Dutch Ministry of Finance published a Decree in December 2014, making it possible to form such a fiscal unity. On October 16, 2015, a proposal was finally published with the purpose to amend the current fiscal unity regime so that it is in line with EU legislation. By means of the adopted amended fiscal unity regime, the possibility to form such fiscal unity is now formally implemented in Dutch tax law as of 9 December 2016. Furthermore, the amended fiscal unity regime provides for several additional anti-abuse rules, amongst others, to avoid double loss-taking or the avoidance of interest deduction limitation rules.
Would you like to know more about the above or whether it is beneficial for your company to form a fiscal unity? Please contact your PwC advisor who will be pleased to help you. You may also contact Mariska van der Maas (+31 (0)88 792 39 56) or Michel van Dun (+31 (0) 88 792 14 09).