Changes in the Dutch Fiscal Unity Decree

The Fiscal Unity Decree of The Netherlands has been amended per 10 June 2020. The amendments concern a number of editorial changes (not intended to change the substance of the decree), a clarification of the section on maintaining the fiscal unity in the case of sales contracts with restrictive conditions (section 3.3), and the addition of certain sections.

Profit definition
First and foremost, the intended interpretation of the term “profit” in section 7.3 has been clarified. This clarification means that the term “profit” should be interpreted in an algebraic manner. This means that it includes both positive and negative profits.

Passing on of interest to a subsidiary
Secondly, the passing on of interest to a subsidiary after the inclusion of an existing fiscal unity in a new fiscal unity and the subsequent demerger of that subsidiary has been changed. The reason for this change is that in certain situations, losses of the old fiscal unity could not be used to offset (future) profits because these losses occurred before the fiscal unity became part of the new fiscal unity. Once the subsidiary that generated these interests left the new fiscal unity, they remained in the new fiscal unity and could therefore not be used by the subsidiary which generated them. This was deemed to be undesirable and has been changed. It has now been made possible to take these interests into account when calculating the profit of the subsidiary after demerging.

Merger and demerger in the same financial year
Another amended change affects the creation of a sister fiscal entity upon merger and demerger in the same financial year.  Before the amendments, in situations where a sister-fiscal unity was formed and within the same year, this sister-fiscal unity dissolved because it became part of a ‘regular’ fiscal unity as written in art. 15 of the Dutch Corporate Income Tax Act (DCIT), the sister-fiscal unity was deemed to never have existed. This amendment makes it so that art. 15, paragraph 11 DCIT does not apply in situations like the one described above.

Besides the changes mentioned before, the decree includes some minor textual changes and other clarifications.

Do you want to know whether or not forming a fiscal unity will be beneficial for your company or if you have any questions regarding fiscal unities, please do not hesitate to contact us.

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