On 12 June, 2014 the Court of Justice of the European Union (CJEU) in connection to a Dutch case concluded that Dutch law is not compliant with EU law—i.e., the freedom of establishment—in denying tax consolidation (fiscal unity):
• between a Dutch parent company and its Dutch sub-subsidiary (when the subsidiary is not a resident of the Netherlands); or
• between two Dutch “sister subsidiaries” (when the parent company is not a resident of 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.
It is expected that the Dutch legislator will amend the fiscal unity legislation to bring it in line with the decision of the CJ.
June 14, 2014