NETHERLANDS Law and Practice Contributed by: Michael Molenaars, Jeroen Smits, Reinout de Boer and Rogier van der Struijk, Stibbe
2.6 Consolidated Tax Grouping For Dutch corporate income tax purposes, corporate taxpayers that meet certain requirements can form a so-called fiscal unit. The key benefits of forming a fiscal unit are that losses can be settled with positive results within the same year (horizontal loss compen - sation) and only one corporate income tax return need be filed, which includes the consolidated tax balance sheet and profit-and-loss account of the entities con - solidated therein. The main requirements for forming a fiscal unit are that a parent company should have 95% of the legal and economic ownership of the shares in a given subsidiary. Moreover, the Dutch legislature has responded to the obligations following from further EU case law to arrive at an equal tax treatment of cross-border situations when compared to domestic situations, by means of limiting the positive effects of fiscal unity in domestic situations (instead of extending those positive effects to cross-border situations). Mostly with retroactive effect to 1 January 2018, several corporate income tax regimes (ie, various interest limitation rules, elements of the participation exemption regime and anti-abuse rules in relation to the transfer of losses) are applied to companies included in a fiscal unit (ie, a Dutch tax group) as if no fiscal unit has ever existed. This emer - gency legislation was intended to be followed up by a new, future-proof Dutch tax group regime. However, the timing of the introduction of such a new regime Capital gains (and losses) realised on the assets of a Dutch corporate income taxpayer are in principle considered taxable income that is taxable at the statu - tory tax rate, unless it concerns a capital gain on a shareholding that meets all the requirements to apply the participation exemption. Based on the participa - tion exemption, capital gains and dividend income from qualified shareholdings are fully exempt from the Dutch corporate income tax base. Essentially, the participation exemption applies to shareholdings that amount to at least 5% of the nomi - nal paid-up capital of the subsidiary, the capital of which is divided into shares while these shares are not held for portfolio investment purposes. Shares are remains uncertain. 2.7 Capital Gains
• If a loan agreement economically resembles equity (eg, since the loan is subordinated, the interest accrual is dependent on the profit and the term exceeds 50 years), the loan may be requalified as equity for Dutch corporate income tax purposes, as a consequence of which the interest would be requalified as a dividend, which is not deductible. • If a granted loan is considered to be a non- businesslike loan ( onzakelijke lening ) from a tax perspective, it may effectively result in limitation of deductible interest because of a possible (down - ward) adjustment of the applied interest rate for Dutch tax purposes. • Interest expenses due on a loan taken on from a group company that is used to fund capital con - tributions or repayments, dividend distributions or the acquisition of a shareholding may, under cer - tain circumstances, not be deductible (irrespective of the presence of a Dutch tax group). • Interest expenses due on a loan taken on from a group company should not be deductible if the loan has no fixed maturity or a maturity of at least ten years, while de jure or de facto no-interest remuneration or an interest remuneration that is substantially lower than the arm’s length remunera - tion has been agreed upon. • For financial years starting on or after 1 January 2019, as part of the implementation of the EU’s Anti-Tax Avoidance Directive (ATAD), the deduction of interest expenses is limited to 30% of a taxpay - er’s EBITDA or EUR1 million, whichever is higher (so-called “earnings stripping rules”). Since 1 Janu - ary 2022, this has been further limited to 20% of a taxpayer’s EBITDA or EUR1 million, whichever is higher. As of 1 January 2025, the EBITDA cap has been increased to 24.5% (which is also the appli - cable rate in 2026). • As a result of ATAD 2, interest deductions may be limited or denied in case of hybrid mismatches resulting in mismatch outcomes between associat - ed enterprises (ie, in short, situations with a double deduction or a deduction without inclusion). • For Dutch corporate income tax purposes, inter - est deductions for banks and insurers are limited where the debt financing ( vreemd vermogen ) exceeds more than 89.4% of the total assets (in 2026). The equity ratio is determined on 31 Decem - ber of the preceding book year of the taxpayer.
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