Fiscal Unit

A fiscal unit is an arrangement in which two corporation taxpayers are supposed to be merged as if there is a single taxpayer. The corporation tax fiscal unit has some significant advantages, but also disadvantages. Would you like to know if formation of a fiscal unit makes sense for your company?

What does it involve?

The main advantages of a fiscal unit are:

  • A loss from one fiscal unit company, for example as a result of interest or interest costs, can be offset against taxable profits of another company in the fiscal unit within the year
  • Profit on intercompany transactions within the fiscal unit need not be accounted for. This means that activities and/or assets can be moved and restructured without taxation within the fiscal unit
  • Only one corporation tax return must be submitted

Conditions

Would you like to set up a fiscal unit for corporation tax? Then you must meet the following conditions:

  • The parent company (a Dutch limited company, joint-stock company or cooperative) must have at least 95% of the legal and beneficial ownership of the shares in the subsidiary (limited or joint-stock company)
  • The financial years of the fiscal unit companies must coincide
  • A fiscal unit is optional and must be requested from the tax authorities

And then?

Provided that the conditions are met, an application can be retroactive for up to 3 months. On any failure to comply with the fiscal unit conditions, or if a dissolution request is submitted, the fiscal unit will end. Starting and stopping a fiscal unit could have adverse consequences in certain situations, such as unwanted profit taking. So make sure you know about them in advance!

Would you like to learn more?

Would you like to know more about the tax benefits for your company or what actions you should take? Then talk to Eric Klein Hesseling (partner) by e-mail: eric.kleinhesseling@mazars.nl or by phone: +31 88 277 23 84. He will be happy to assist you further. 

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