Corporate income tax filing within a Dutch fiscal unity: how does it work?

Within a Dutch CIT fiscal unity, only the parent company files a tax return, and it files one combined return for the entire group. Subsidiaries do not file separate returns of their own while they are members of the unity. Transactions between the consolidated companies are eliminated from the profit calculation, and the low CIT rate applies only once for the whole unity.

Who is required to file within the fiscal unity?

The parent company is the filer for the CIT of the entire fiscal unity. It submits one return covering the combined, consolidated result of all consolidated companies. The subsidiaries remain independently taxable, but their tax debt is settled through the parent. This follows from the core of article 15 Dutch CIT Act 1969: tax is levied as if there is a single taxpayer.

How is the combined profit calculated?

The profit of each consolidated company is first determined separately under the ordinary CIT rules. The results of all companies are then added together into a single taxable amount for the unity. Corrections at the level of the individual company, for example for non-deductible costs, still apply per company.

What happens to intragroup transactions?

Transactions between consolidated companies are eliminated for CIT purposes. If BV Parent sells goods to BV Subsidiary, that intragroup turnover does not count in the unity's taxable profit: the profit and the cost cancel each other out. Internal services, management fees and internal interest between consolidated companies also have no tax effect. This makes reorganisations and asset transfers within the group fiscally neutral in principle, though exceptions apply, such as the article 15ai recapture on a later separation.

Example: BV Operating Company invoices BV Parent € 150,000 in management fees. Within the fiscal unity this fee cancels itself out: the cost deduction at the parent and the income at the operating company both disappear from the consolidated return.

What does the low-rate bracket cost within a fiscal unity?

The 19% low-rate bracket on the first € 200,000 of profit (article 22 Dutch CIT Act 1969) applies only once for the whole group within a fiscal unity, instead of per entity. This is a real disadvantage for groups with multiple profitable entities that would each independently stay below € 200,000. The full calculation with a worked example is in Disadvantages and risks of a Dutch CIT fiscal unity.

Who is liable if the return is wrong or unpaid?

Every company that forms part of the fiscal unity is jointly and severally liable for the CIT debts of the entire unity, under article 39 of the Invorderingswet 1990. The Belastingdienst can therefore recover an outstanding assessment of the unity from any consolidated company, even if the tax debt was in fact caused by the activities of a different company within the group. This continues to apply after separation, for debts that arose during membership.

How does the CIT return relate to loss relief?

A loss incurred by one company is offset within the return immediately against the profit of another consolidated company, without a separate request. That is one of the core benefits of the unity. A stricter rule applies to losses from before consolidation: those can only be set off against the own profit of that same company (profit splitting). See Pre-consolidation losses in a Dutch fiscal unity for the detail and a worked example.

Frequently asked questions

Does a subsidiary need to file its own CIT return?

No, as long as it is a member of the fiscal unity only the parent files. Once the subsidiary leaves the unity, it must file its own return again from that point on.

Can the Belastingdienst assess a subsidiary separately?

The assessment is issued to the parent, but the joint and several liability under article 39 Invorderingswet 1990 means the Belastingdienst can also recover an outstanding debt from a subsidiary.

Does the turnover of subsidiaries count toward thresholds such as the innovation box?

For facilities assessed at the level of the fiscal unity, what counts is the consolidated result of the unity as a whole, not the results of each separate company. The exact application differs per facility; consult an adviser or belastingdienst.nl if unsure.

Next step

Considering a fiscal unity to simplify your filing? Start with the eligibility check. Also read Benefits of a Dutch CIT fiscal unity and Disadvantages and risks of a Dutch CIT fiscal unity. More on the regime as a whole: What is a Dutch CIT fiscal unity?.