Netherlands: CJEU opinion on corporate fiscal unity | KPMG | GLOBAL

Netherlands: CJEU opinion on corporate fiscal unity, emergency cabinet response

Netherlands: CJEU opinion on corporate fiscal unity

The Advocate General of the Court of Justice of the European Union (CJEU) on 25 October 2017 issued an opinion referred to the CJEU from the Dutch Supreme Court concerning a corporate income tax issue—whether taxpayers, despite being unable to enter into a fiscal unity with subsidiaries established elsewhere in the EU, are nevertheless eligible for benefits from certain separate elements of the fiscal unity regime as if there were the ability to enter into a fiscal unity with foreign subsidiaries (the “per element” approach).

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Two cases were joined by the CJEU. In one of the cases, the issue concerned the interest deduction limitation (profit shifting under section 10a of the Dutch corporate income tax law). The Advocate General concluded that the interest deduction limitation is contrary to the freedom of establishment. 

In response to this opinion, the Dutch Cabinet announced, also on 25 October 2017, emergency remedial measures. These measures effectively provide that, if the judgment by the CJEU has an undesirable budgetary impact for the Netherlands, some corporate income tax and dividend withholding tax rules—also in domestic corporate relationships—would be applied as if there is no fiscal unity.

 

Read an October 2017 report prepared by the KPMG member firm in the Netherlands

 

Read an October 2017 report [PDF 144 KB] prepared by KPMG’s EU Tax Centre

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