Tax consolidation

While every B.V. is required to file returns independently, the Netherlands also offers a tax consolidation regime. Under this regime, several B.V.s belonging to a single organisation can file a single corporate tax return. Let's explore whether it's a suitable option for you! We’re here to think things through together!

Tax consolidation

As the saying goes, one B.V. is hardly a B.V. Most organisations adopt a group structure consisting of at least two B.V.s: a holding company and an operating company. As your organisation grows, it will face greater risks or engage in different operational activities, often resulting in the establishment of one or more additional group companies.

While every B.V. is required to file an independent tax return for corporate tax , you can also opt for tax consolidation. This involves filing a joint corporate income tax return for all B.V.s that make up your organisation. Legally, the s remain separate, but they are seen as a single taxpayer for tax purposes, because all subsidiary P&Ls are attributed to the parent company.

Rob Borgerink Senior belastingadviseur

Tax consolidation – yes or no?

There is no cut-and-dried answer as to whether tax consolidation is suitable for your business. It is very important to carefully weigh the pros and cons, as listed below.

Advantages

The advantages of tax consolidation include:

you only have to file one tax return every year;
intercompany loss relief;
elimination of intercompany P&L;
silent reorganisation;
the ability to reinvest within the tax consolidation group.

Cons

The disadvantages of tax consolidation include:

joint and several liability for each B.V. within the tax consolidation group;
limited access to the lower corporate tax bracket;
a greater likelihood of receiving a lower investment deduction (KIA) compared to separate entities;
anti-abuse rules that may apply if the tax consolidation group is dissolved.

It’s important to regularly review whether tax consolidation is still beneficial for your organisation or whether it might be more advantageous to dissolve the structure. We’re here to help.

Conditions for tax consolidation

Tax consolidation can only be applied if several conditions are met, including:

The parent company holds at least 95% of both the legal and economic ownership of the shares in the subsidiary or subsidiaries.
The financial years of all companies within the group must align, with an exception for the year in which a company is incorporated.
All companies in the group must apply the same rules for calculating taxable profit.

In a cross-border context, special rules may apply to tax consolidation. It’s important to seek proper advice in such cases.

Is tax consolidation

interesting for you?

Tax consolidation can be an attractive option. We’re happy to explore whether your company qualifies for tax consolidation and whether it’s a smart choice in your situation. Together, we’ll take steps toward a successful future!

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