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17 June 2019

The Netherlands starts consultation process on new group scheme for Dutch corporate income tax

Today (17 June) the internet consultation for a new group scheme for corporate income tax has started. The Dutch State Secretary for Finance has invited interested parties to provide their input on the design of this (future) group scheme. The current group scheme for Dutch corporate income tax - the regime of the fiscal unity - is to be succeeded by a new robust and future-proof group scheme, partly as a result of the case law of the Court of Justice of the European Union.

The new group scheme was previously announced. This emergency repair was necessary as a result of the case law of the Court of Justice of the European Union (X case (C-398/16)).

Under the current fiscal unity regime, a group of entities, often consisting of a parent company and one or more subsidiaries, is taxed as if there were a single taxpayer for the purposes of corporate income tax, subject to conditions. The activities and assets of a subsidiary are allocated to the parent company. The parent company then makes one (joint) corporate income tax return. Some (further) exceptions to this principle have been introduced earlier this year as a response to the abovementioned decision of the ECJ.

For purpose of the consultation process, an optional document is presented with four possible solutions for a new group scheme. This document was drawn up as a result of a kick-off meeting on 14 February 2019 in which various representatives from the business community, interest groups and the scientific community exchanged views on a future group scheme as a successor to the current fiscal unity scheme.

Interest groups, companies, scientists and other interested parties can respond to the consultation in the period from 17 June 2019 up to and including 29 July 2019. Based on the responses to this internet consultation, the aim is to send a letter to the Lower House of Parliament in the autumn of 2019 containing a sketch of the intended group scheme. This needs to result in a new scheme, the rules of which are laid down in a draft bill that is expected to be submitted for internet consultation in mid-2020.

The options identified in the consultation document are:

  • maintaining the current regime, but implementing measures to eliminate possible further discriminatory elements;
  • abolishment of current regime, without implementation of an alternative group tax regime;
  • abolishment of current regime and implementation of loss or profit assignment (surrender) regime; and
  • the introduction of a cross-border fiscal unity with a full relief for profits (and losses) attributable to non-resident group entities. This option would potentially eliminate the discriminatory elements identified in the abovementioned ECJ decision.

The following link brings you to the consultation document (in Dutch): https://www.internetconsultatie.nl/groepsregeling/document/4653

 

For more information or additional input please contact Anton Louwinger.