The current corporation tax rate is 15% on profits up to EUR 245,000 and 25% on the excess over this amount. From next year onwards, the first tax bracket will be extended to EUR 395,000. Additionally, the corporation tax rate for the second bracket is likely to be increased to 25.8%.
For corporation tax purposes, and subject to certain conditions, multiple private limited liability companies can be combined into a single tax group so as to allow losses to be set off against profits within the group. The tax group will be treated as a single taxpayer. However, regardless of the number of companies included in the tax group, the first tax bracket will be available only once.
Given the difference between the tax rates in the first and second brackets, removing a profitable company from a tax group can potentially yield an annual benefit of EUR 42,660.
It would therefore be advisable to consider whether it might be useful to break up a tax group (or any particular part of it). A point requiring attention in this regard is whether there have been any shifts of assets between the companies within the tax group in the previous six years. If the tax group is to be partially or fully terminated as of 1 January 2022, the relevant request must have been received by the Dutch Tax and Customs Administration before that date.
In view of the potential maximum annual benefit of EUR 42,660, it may also be useful to consider hiving off profitable activities to a separate company. This type of separation will not trigger corporation tax, subject to certain conditions.
If you have any questions, please feel free to contact us without obligation.