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Finance Business Service

Dutch Government Announced Possible Amendment of Fiscal Unity Regime


According to a recent announcement of the Dutch Ministry of Finance, the fiscal unity regime of the state may be amended with retroactive effect to October 25, 2017, 11.00 hours. It has been caused by the recent release of the opinion of EU Advocate General Campos Sánchez-Bordana in C-398/16 and C-399/16 cases. In both cases, the question is to what extent the current Dutch fiscal unity regime does not comply with EU law (in particular, concerning the freedom of establishment) in the context of any difference in approaches between the companies belonging to fiscal unity, on the one hand, and the companies that are not related to it, on the other.

As a result of the release of the opinion and in order to avoid a significant negative impact on the budget, the Dutch Ministry of Finance announced that the fiscal unity regime will be amended with retroactive effect to October 25, 2017, 11.00 hours, if according to the decision of the European Court, along with the opinion of the Advocate General, in C-398/16 or C-399/16 cases, the Dutch fiscal unity regime violates EU legislation.

We note that at this stage the matter is not about the draft legislative proposal, but only a two-page summary of the intended amendments.

Thus, the essence of the statement is not clear. As the summary informs, the Dutch fiscal unity regime must be amended in such a way that in domestic fiscal unity situations, for the application of (1) art. 10a Dutch Corporate income tax act 1969 (“DCITA”, Dutch anti-base erosion rule), (2) art. 13 DCITA (Dutch participation exemption regime), (3) art. 13L (anti excessively participations) and (4) art. 20a DCITA (anti-tax loss transfer rules), the fiscal unity regime should not be taken into account. For example, disregarding the fiscal unity regime related to the Dutch anti-base erosion rules could lead to the recognition of a tainted transaction that was not previously taken into account under the fiscal unity regime, as a result of which the deduction of interest expenses could be limited.

The Dutch Ministry of Finance also stressed that the retroactive amendment of the fiscal unity regime was announced temporary taking into account a possible further revision of the Dutch tax grouping regime.

Алёна Каменецкая
Senior Lawyer
Finance Business Service