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Fiscal unity

BV companies within a group need to act between each other as if they are third parties. When a holding company holds 100% of the shares of the working company, then still the transactions between companies need to be processed as if they are not related. This can result in profit being allocated on different places, maybe places that are fiscally not interesting. For that and other reasons there can be applied for a fiscal unity. What is a fiscal unity?

A fiscal unity for corporate income tax can be requested for when the one company holds 100% of the shares of the other company. By becoming a fiscal unity, the two companies become one for fiscal purposes. So the daughter/working company will be included in the mother/holding company.

The advantage is that transactions between the companies are no longer feasible in the corporate income tax return, the two companies have become one for fiscal purposes. Allocating problems are solved.

However, from a commercial point of view and by instructions of the tax office, these companies still need to act between each other as if there is no fiscal unity. The fiscal unity only exists for the corporate income tax return. But the moment these companies are disconnected, or upon request, the fiscal unity stops existing. At that moment it needs to be clear which company has what obligation to each other and to actual third parties. Moreover, assets that moved from the one company within the fiscal unity to the other company will have special attention from the Dutch tax office.

Is a fiscal unity benefitting the taxable companies? Yes it is. The most common problems are immediately solved. One of them are intercompany loans that might not meet the fiscal criteria. As one loan to the other company within a fiscal unity disappears in the corporate income tax return, these loans cannot be at fault for tax purposes. But nevertheless, these loans need to comply with regulations, in case of termination of the fiscal unity.

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