Fiscal unity for VAT and corporate tax: what it means for BVs

With a fiscal unity, several BVs are treated as one for tax purposes. For corporate income tax, the parent must hold at least 95% of the subsidiary's shares, and you file one return together. For VAT, more than 50% of the shares is required, plus organisational and economic ties. They are two separate schemes.

Fiscal unity for corporate income tax

A fiscal unity for corporate income tax only arises on request. The subsidiary's profit is then added to the parent's, which files the only return. The biggest advantage: a loss in one BV is offset directly against profit in the other.

• The parent holds at least 95% of the subsidiary's shares, voting rights, profit and assets
• The subsidiary is a BV or NV
• Both have the same financial year and the same profit rules
• Both are actually established in the Netherlands

Note: each BV still prepares its own annual accounts and files them with the KvK. The fiscal unity only applies to tax.

Fiscal unity for VAT

For VAT, businesses form a fiscal unity if they are financially, organisationally and economically intertwined. They then file one joint VAT return, and supplies and services between them are not subject to VAT.

• Financial: more than 50% of the shares and control in the same hands
• Organisational: one overarching management, or the management of one is in fact subordinate to the other
• Economic: the same economic purpose, or one business works more than 50% for the other
• All parts are entrepreneurs for VAT and established in the Netherlands

Each BV in a VAT fiscal unity is jointly and severally liable for the VAT debt of the whole unity. If the operating company goes bankrupt, the Belastingdienst can therefore also collect the VAT from the holding.

The comparison

The holding company and VAT

A holding that only holds shares is usually not an entrepreneur for VAT and cannot deduct the VAT on its costs. If the holding provides management services to the operating BV for a fee, it is an entrepreneur and charges VAT on that fee, unless the BVs form a VAT fiscal unity. Which setup works best depends on your structure. Our tax advisers will work it out with you.