A tax group for the corporation tax (CT) Termination may take place upon request. However, this request does not have retroactive effect. If the dissolution is to take effect at the start of a new financial year (for many companies, this is 1 January 2016), the request must be received by the Tax and Customs Administration before that date. If the tax group is dissolved during the financial year, this will result in separate tax years, entailing additional administrative burdens. The request need not relate to the dissolution of the entire tax group, but may also concern one or more members of the tax group
REMEMBER: the dissolution of the fiscal unity may result in penalty provisions coming into effect, thereby giving rise to a liability for corporation tax.
Dissolving a corporate tax group can be advantageous because the results of the companies forming part of the group are no longer aggregated:
– the progressive tax rate applies to each company individually (up to €200,000, the taxable amount is taxed at a rate of 20%; above that amount, a rate of 25% applies);
– the small-scale investment allowance is calculated on a company-by-company basis;
– the constituent entities of the fiscal unity are no longer jointly and severally liable for the corporate tax liabilities of the fiscal unity.
However, once the fiscal unity has been dissolved, each individual company must file its own corporation tax return; losses incurred by one company cannot be set off against the profits of another; and capital gains arising from intercompany transactions are subject to tax.
If you wish to establish a tax group for corporation tax purposes, a (limited) retroactive effect does apply. The application to include companies in a tax group must be submitted within 3 months of the intended date of inclusion. An application for inclusion with effect from 1 January 2016 must therefore be received by the Tax and Customs Administration by 31 March 2016 at the latest.
A tax group for the VAT It cannot be dissolved on request. As long as the conditions applicable to the VAT group are met, the VAT group remains in place. If it is desired to dissolve the VAT group, it must be examined whether the situation can be altered in such a way that the conditions are no longer met.