Fiscal unity with a newly incorporated subsidiary
A parent company can create a fiscal unity with a subsidiary in which it holds an interest of at least 95% provided that – amongst others – the financial years of parent and subsidiary are equal. In case of a newly incorporated company the first financial year of the subsidiary will be different than that from the parent company. The first financial year of the subsidiary can be, for example, 5 March till 31 December while the corresponding financial year of the parent covers the period 1 January till 31 December.
Special rules exist to make it possible creating a fiscal unity with a newly incorporated subsidiary as from the date of its incorporation. There were no rules, however, that allowed creating a fiscal unity with such new subsidiary starting on a different day than the day of incorporation. It was not possible, therefore, to start the fiscal unity starting from 1 July if that was not the day of incorporation.
In a Decree of 26 September 2005, the Ministry of Finance announced that it will approve requests to create a fiscal unity on any chosen day during the first financial year of a subsidiary. Of course this requires a timely request (i.e. within three months after the moment that the fiscal unity should be created) and other requirements to be fulfilled.
Taxpayers who requested such fiscal unity in the past, but were confronted with a strict interpretation by the tax inspector can obtain the desired fiscal unity retroactively.
