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Legislative proposal published
Fiscal Unity through an EU entity
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October 2015
Achtergrond
The legislative proposal aligns the
Dutch fiscal unity regime with EU
law. On 12 June 2014 the EU Court
of Justice (“CJEU”) ruled that the
Dutch fiscal unity regime was in
breach of the European freedom
of establishment, because a fiscal
unity between two Dutch entities
linked with each other through
a European entity is not possible
under the current Corporate
Income Tax Act (“CITA”). On
11 December 2014, the Dutch
Higher Court in Amsterdam ruled
in accordance with the CJEU
decisions in three separate cases.
In his Decree of 16th of December
2014, the state secretary of finance
gave an approval, in which Dutch
tax inspectors are ordered to
approve requests for a fiscal unity
between two Dutch entities linked
through an EU entity. In this Decree
the state secretary already gave
several conditions that need to be
met. Today’s proposal amends the
fiscal unity regime in the CITA, so
that fiscal unities between Dutch
companies linked through EU
entities are now made possible.
The law proposal of 16 October 2015, sets the conditions under which a corporate
tax fiscal unity can be formed between Dutch entities that are connected through
EU entities. These fiscal unities can be formed between parent companies and
sub-subsidiaries or between sister companies or in other various situations. In the
below we will discuss the most important issues from the law proposal.
Conditions
General conditions
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• All entities in the fiscal unity must be established
in the Netherlands or must run a business through
a permanent establishment in the Netherlands.
In the latter case the entity is included in the
fiscal unity only insofar as a Dutch permanent
establishment is present.
• The entities that are included in a fiscal unity must
all be related to each other through a shareholders
relationship where the parent company holds
directly or indirectly at least the whole legal and
economic ownership of 95 per cent of the shares
and the voting rights, the rights the company
proceeds and the company’s capital.
Specific conditions in parent companies and
sub-subsidiary situations
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an entity of which the whole legal and
economic ownership of at least 95 per cent of
the shares is held by an entity that is included
in the fiscal unity or by another qualifying
intermediary company or by an EU parent
company in sister company fiscal unity
situations.
Specific conditions for sister companies
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NL
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• If a Dutch entity indirectly owns shares in another
Dutch entity through one or more intermediary
subsidiaries that are not established in the
Netherlands, the Dutch entities may enter into a
fiscal unity together if the intermediary companies
are:
–– established in the EU (not in NL, Dutch
intermediary entities must also enter into the
fiscal unity);
–– an NV or BV or another comparable entity (this
means it must be an entity of which the capital
is divided into shares);
–– involuntarily subject to tax; and
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• Two sister companies with the same (ultimate)
parent company may enter into a fiscal unity
together by a joint request of both companies if the
parent company:
–– is established within the EU (not in the
Netherlands);
–– is an NV/BV/Cooperative/Mutual Insurance
Society/Association/Foundation or another
comparable entity; and
–– is (involuntarily) subject to tax.
• If sister companies enter into a fiscal unity together,
one of them must be appointed as parent company
by choice. In the case where one sister holds one
or more shares in the other company either direct
or through another company, this sister company
must be appointed as the parent company.
• Both sister companies must be and NV or BV or
another comparable entity.
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Specific conditions for permanent
establishments
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rule would lead to a lower amount of non-deductible
interest. The law proposal contains anti-abuse
legislation to prevent such an unintentional effect.
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Which situation applies to you?
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Does your organisation contain a
fiscal unity through an EU entity?
If a fiscal unity has already been formed,
before the introduction of the law
proposal, it is advisable to check if the
newly introduced legislation has any
consequences for the taxation at the level
of the fiscal unity.
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If a foreign entity has a Dutch permanent
establishment, the entity may be included in a Dutch
fiscal unity insofar as the permanent establishment
is present. Under certain conditions this was already
possible without the law proposal. For instance, if the
permanent establishment acts as a parent company
in the fiscal unity, the subsidiaries of the foreign
entity that are included in the fiscal unity must be
attributable to the permanent establishment.
It is proposed that this condition will nog longer apply
to EU situations. An entity that is established within
the EU and that runs a permanent establishment in the
Netherlands, may be included the fiscal unity insofar as
it has a Dutch permanent establishment, together with
any Dutch (sub-)subsidiaries or Dutch sister companies
of the EU entity.
Anti-abuse legislation
The law proposal also introduces anti-abuse legislation.
The most important anti abuse rules are discussed in
the below.
• The liquidation loss regime has been altered, making
it impossible to deduct a liquidation loss that has
already been taken into account as a fiscal unity
loss. Otherwise this would have been possible in
situations where a parent company forms a fiscal
unity together with a sub-subsidiary and the subsubsidiary makes losses, followed by liquidation of
the EU intermediary subsidiary.
• Another proposal prevents the manifestation of
a double fiscal unity loss in cases where a loan is
devalued which relates to losses of a company that is
included in the fiscal unity.
• In parent sub-subsidiary fiscal unities the equity of
the fiscal unity is increased with the equity of the
sub-subsidiary while the capital of the fiscal unity
also includes the intermediary subsidiary. As an
effect some capital is essentially taken into account
twice. Without anti-abuse legislation this would lead
to unintentional effects for the participation debt
interest rule. In these case the participation debt
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Have you requested the formation of
a fiscal unity without having received
a decision yet?
The tax authorities are obliged to apply
the Decree of 16 December 2014 in
these cases. The law proposal is contains
legislation that is very similar to the
Decree. It is therefore expected that the tax
authorities will grant a positive decision
shortly, if you meet the conditions. In
these cases it is important to check which
consequences the law proposal has for your
request.
Does your organisation not yet
contain a fiscal unity through an EU
entity?
In new situations it should be checked if
forming a fiscal unity through an EU entity
can be beneficial, given the conditions in
the law proposal.
When will the proposal be enacted
Before the law proposal is enacted it is subject to
parliamentary process. It will be subject to possible
amendments after review by the Second Chamber in
parliament and subject to review by the First Chamber.
We will keep you informed of any developments
regarding the law proposal.
Contact
In situations where a request has not yet been made,
or where a current request is pending, or in situations
where a fiscal unity has already been set up PwC
can advise regarding the consequences of the law
proposal for your specific situation. We advise you to
contact your PwC adviser or:
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Mariska van der Maas
Knowledge Centre Tax & HRS
+31 (0)88 792 39 56
[email protected]
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