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Details

  • Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 2/28/2014

Netherlands - Tax consolidation denied for foreign parent, sister company 

February 28:  The Advocate General of the Court of Justice of the European Union (CJEU) released an opinion in consolidated cases, concluding that Dutch law that denies tax consolidation when either a parent company or sister company is a foreign entity is in breach of EU law. SCA Group Holding, C-39/13, C-40/13, and C-41/13 (27 February 2014)

The Advocate General found that the Dutch rules are in breach of the freedom of establishment in that the rules deny tax consolidation (fiscal unity) between—


  • A Dutch parent company and its Dutch sub-subsidiary because the subsidiary was not a resident of the Netherlands, or
  • Two Dutch sister subsidiaries because the parent company is not resident in the Netherlands

Under Dutch law, a fiscal unity for corporate income purposes cannot be established between sister companies of a foreign parent, or between sister companies and the foreign parent.


This rule also applies to a domestic parent company that holds a domestic sub-subsidiary through an intermediate holding company resident abroad.


The question presented to the CJEU was whether this rule is in accordance with the EU freedom of establishment.


Read a February 2014 report prepared by the KPMG member firm in the Netherlands: Advocate General at Court of Justice of the European Union concludes against the rejection, by the Netherlands, of a fiscal unity between sister companies and between a parent and sub-subsidiary




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