Fiscal Unity recovery legislation adopted by Dutch Lower House

THE NETHERLANDS - Fiscal Unity recovery legislation adopted by Dutch Lower House

May 2019

On 12 February 2019, the Dutch Lower House adopted the Fiscal Unity recovery legislation (‘Wet spoedreparatie fiscale eenheid’). The bill implements the so-called per-element-approach in the Dutch fiscal unity regime, in an attempt to remove the advantageous treatment of resident companies. The bill will ignore fiscal unities for certain provisions in the Corporate Income Tax Act (hereinafter: CITA) and the Dividend Withholding Tax Act (hereinafter: DWTA).

The Fiscal Unity recovery legislation

The bill contains recovery legislation to repair the consequences of the CJEU decision of 22 February 2018. On the basis of the proposed recovery measures the following regulations (and related rules) in the CITA and the DWTA will be adjusted.

The CITA and the DWTA need to be applied as if no fiscal unity exists for the following provisions:

  • Base erosion interest deduction limitation rules (article 10a CITA);
  • Certain aspects of the participation exemption rules (article 13, paragraphs 9-15 and 17 CITA and article 13a CITA);
  • Excessive participation interest deduction limitation rules (article 13l CITA);
  • Loss compensation restrictions in the case of a change in beneficial ownership (article 20a CITA), and
  • For dividend withholding tax purposes, the remittance reduction rules (article 11 DWTA).

It is confirmed again that these measures also apply to ‘internal loans’, i.e. loans that have been entered into between companies that are part of the same fiscal unity, despite the fact that the fiscal unity effectively does not deduct interest in respect of these internal loans. This is relevant for the application of the base erosion interest deduction limitation rule (article 10a CITA) and the excessive participation interest deduction limitation
(article 13l CITA). It should be noted that the excessive participation interest deduction limitation rule (article 13l CITA) was abolished from 1 January 2019.

The expectation is that the Dutch fiscal unity regime will be exchanged for a new developed group regime in the CITA that is future-proof, both from an operational and legal perspective. The first draft for such legislation is expected this year. 


The recovery legislation will have retroactive effect to 1 January 2018 and has consequences for many existing Dutch fiscal unities, as it may result in a higher corporate income tax burden. BDO can assist you in an analysis on how the recovery legislation may impact a business.

Hans Noordermeer
[email protected]

Niek de Haan
[email protected]