Changes in the Dutch Fiscal Unity Decree

Dutch Fiscal Unity Decree has been amended per 10 June 2020. The amendments include several editorial changes that do not alter the substance of the decree. They clarify the section on maintaining fiscal unity in sales contracts with restrictive conditions (section 3.3). Additionally, the amendments add 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, changes have been made to passing on interest to a subsidiary after including an existing fiscal unity in a new fiscal unity and subsequently demerging that subsidiary. This change addresses situations where losses of the old fiscal unity could not offset future profits because these losses occurred before joining the new fiscal unity. Once the subsidiary that generated these interests left the new fiscal unity, the interests remained in the new fiscal unity. Therefore, the subsidiary that generated the interests could not use 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 Dutch 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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