Netherlands: Fiscal unity between Dutch subsidiaries | KPMG | GLOBAL

Netherlands: Fiscal unity between Dutch subsidiaries of a joint non-EU parent company

Netherlands: Fiscal unity between Dutch subsidiaries

A Dutch court of appeals held that under certain income tax treaties, a request to form a fiscal unity between sister companies must be allowed—even if the joint parent company is established in a third country (that is, a country outside the European Union (EU) or European Economic Area (EEA)).


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The decision was issued by the Court of Appeals Arnhem-Leeuwarden (26 April 2016).

KPMG observation

This decision may provide opportunities in certain instances when it is not possible under EU law to assert a claim for fiscal unity. In such instances, it may be advisable to request fiscal unity between sister companies with a third country’s involvement, and then file a notice of objection against the tax authorities’ rejection of the request. This also may apply to situations when there is an intermediary that is established in a qualifying third country, when the parent and sub-subsidiary companies are established in the Netherlands (known as a “Papillon fiscal unity”).

Because the appeals court based its decision in part on the OECD Model Convention, the judgment may also in principle also be referred to in situations—including those involving Dutch permanent establishments—when the parent company or intermediary is established in another third country, provided that the Netherlands has concluded a tax treaty with the particular country and that treaty includes a non-discrimination clause that is based on the OECD Model Convention. 

It is expected the Dutch government will appeal this decision to the Supreme Court.


Read a May 2016 report prepared by the KPMG member firm in the Netherlands: Court of Appeals allows a fiscal unity between Dutch subsidiaries of a joint non-EU parent company

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