Please bear in mind that a request can only be backdated for a maximum of three months. If you wish to include a company in the tax group with effect from 1 January 2023, the application to do so must therefore before 1 April 2023 have been submitted to the Tax and Customs Administration.
The tax group
What exactly is a tax group, and when can one be formed? Under certain conditions, a parent company may form a tax group with its (grand)subsidiaries. Firstly, the parent company must hold at least a 95% legal and economic interest in the subsidiary. Furthermore, the financial years must coincide and the same rules must apply when determining profit.
In a tax group, the subsidiary’s results are attributed to the parent company. The subsidiary does not cease to exist, but is no longer required to file its own tax return.
Advantages and disadvantages of a fiscal unity
There are various advantages to being part of a fiscal unity. For example, only one tax return needs to be filed, there is the option of horizontal loss relief, and intercompany transactions are not disclosed.
One disadvantage is that each company is jointly and severally liable for the parent company’s corporation tax liability, and that the small-scale investment allowance can only be claimed once.
The main disadvantage of a fiscal unity is that the tax bracket step-up can only be utilised once. In 2023, the first €200,000 of profit is taxed at 19%, whilst the excess is taxed at 25.8%. For each company, the maximum benefit amounts to €13,600 (6.8% of €200,000), provided no fiscal unity is formed. Naturally, this applies only if the taxable amount can be allocated across several private limited companies on commercial grounds.
You can read a detailed explanation of the pros and cons here: Forming a corporate tax group.
Retroactivity
If you wish to form or extend a tax group, please bear in mind that a request has a maximum retroactive effect of three months. To form a tax group with effect from 1 January 2023, a request must therefore be submitted to the Tax and Customs Administration by 31 March at the latest.
Are you looking to dissolve a tax group? A tax group cannot be dissolved with retroactive effect, but only with effect from today.
Could forming or dissolving a tax group be an option for you? VWG would be happy to work with you to determine the best approach in terms of (corporate) tax.