Fiscal unity for startups: when is it possible and what should you look out for?

What is a fiscal unity for corporate income tax?

Startups often begin with a single BV, but as a company grows, the structure can become more extensive. Think of a holding company with an operating company, multiple operational BVs, or a group that expands through an acquisition.

For corporate income tax purposes, various group companies can, under certain conditions, form a fiscal unity together. Within that fiscal unity, the parent company is the relevant taxable entity for the levy of corporate income tax.

It is important to note that a fiscal unity does not arise automatically. The mere fact that a holding company owns all shares in an operating company is therefore not sufficient. The companies involved must request the application of the regime and, in addition, meet the statutory requirements.

This makes the fiscal unity a subject that a startup must decide on consciously. It is not only necessary to determine whether the structure qualifies, but also from what moment the fiscal unity is desired and which companies should be included in it.

The eight conditions for a fiscal unity

There are eight statutory requirements for forming and maintaining a fiscal unity. Not every requirement will be equally complex in every startup structure, but together they determine whether the fiscal unity can actually exist.

1. A request must be submitted. The fiscal unity is an elective regime. The taxpayers involved must explicitly request its application. Simply acting as if a fiscal unity exists is not the standard way to establish the regime.
2. The legal forms must be permitted. A BV can be both a parent company and a subsidiary. Various other Dutch and certain foreign legal forms can also participate under certain conditions. For many startups, the combination of different BVs will be the most relevant.
3. There is a residency requirement. The companies involved must be established in the Netherlands or, in the case of foreign tax liability, possess a Dutch permanent establishment that can fall under the arrangement.
4. Certain structures with sister companies or intermediate companies can also fall under the arrangement. The statutory framework contains separate conditions for this. A group does not always have to consist solely of a direct Dutch parent-subsidiary structure, but extra attention is required for more complex international structures.
5. The parent company must meet the 95% ownership requirement. This is one of the most important conditions. It is not just a question of what percentage is on paper in the shareholders' register. The economic ownership and the rights attached to the interest are also relevant.
6. The fiscal periods must align. The fiscal periods of the companies within the fiscal unity must coincide.
7. The same provisions must apply to the determination of profit. Companies subject to substantially different corporate tax regimes cannot simply be consolidated. Separate rules exist for certain specific situations.
8. The shares in the subsidiary must not constitute inventory for the parent company. This is also an independent statutory requirement for the fiscal unity.

For startups with a straightforward holding structure, some of these conditions can be verified quickly. However, it is wise not to view them in isolation. Meeting seven conditions is of no use if the eighth is not met.

The 95% requirement: look beyond the percentage in the cap table

For startups, the 95% ownership requirement deserves particular attention. At first glance, it seems simple: if the holding company owns at least 95% of the subsidiary, the requirement appears to be met.

The reality can be legally more complex. For a fiscal unity, it is not just formal share ownership that matters. The economic ownership of the shareholding and the entitlement to profits also play a role.

This is relevant in a startup environment because share ownership is frequently combined with contractual agreements. During an investment, restructuring, or transaction, rights may be agreed upon—in addition to the shares themselves—that influence the economic interest in those shares. As a result, the tax outcome may differ from what a simple glance at the shareholder register suggests.

There is case law where a fiscal unity could not be formed because the economic interest in the shares effectively lay with a third party due to a put option. A positive fiscal unity ruling had even already been issued. However, the statutory requirements remained decisive.

There is an important practical lesson here for founders and investors. When planning a fiscal unity, do not check only how many shares the holding company legally owns. Also look at the agreements that determine where the economic interest actually lies.

You must actively apply for a fiscal unity

A fiscal unity differs from tax arrangements that apply automatically once certain conditions are met. A fiscal unity requires a formal request.

In practice, a form provided by the Tax and Customs Administration is used for this purpose. In this form, factual information about the companies involved is provided, and questions regarding the conditions for the fiscal unity are answered.

The request is submitted to the inspector responsible for the tax assessment of the parent company.

For startups, timing is particularly important. In principle, a fiscal unity can take effect on a date chosen by the taxpayers, provided that the applicable conditions are met at that time. However, as a general rule, the desired effective date cannot be more than three months prior to the date the request is submitted to the inspector.

This creates a relatively short decision window when changes occur in the group structure. Suppose a holding company acquires a new subsidiary and intends to include this subsidiary in a fiscal unity from the acquisition date. The request can be made after the acquisition, but it is important to monitor the three-month deadline.

There are exceptions to this general rule, but for standard planning, three months is the relevant starting point. Waiting until the first tax return or annual closing is on the table months later may therefore be too late for the originally desired effective date.

Growth, acquisitions, and restructurings make timing important

Especially in startups and scale-ups, the legal structure changes frequently. A new subsidiary is incorporated, an activity is spun off, a company is acquired, or existing entities are brought under a new holding company.

At such times, it is wise to include the fiscal unity directly in the transaction calendar.

The reason is simple. The decision to form a fiscal unity does not necessarily have to be final when a transaction is being prepared, but the deadline continues to run after the desired consolidation date. Since retroactive effect is generally possible for a maximum of three months, there is only a limited period after an acquisition or restructuring to still opt for the desired effective date.

A tax decision that is internally viewed as something for the next filing round can therefore actually be a transaction issue.

For legal, finance, and operations teams within a scale-up, this means the tax position does not need to be reviewed only after closing. When shaping the new group structure, you can already inventory which companies should potentially be included in a fiscal unity, whether the requirements are met, and what the intended date is.

Not every BV within the group has to be included automatically

Another practical point is that there is no general rule for a fiscal unity requiring every qualifying group company to participate.

This is relevant, for example, when an existing fiscal unity is incorporated into a larger group structure. The law contains rules whereby a request from certain parent companies is also deemed to have been made on behalf of companies that are already united with that parent in a fiscal unity.

At the same time, it remains possible to clarify that a specific company should not be included in the larger fiscal unity. There is therefore no simple all-or-nothing approach where every subsidiary within the group must automatically join.

For a startup group with various operating companies, this is an important distinction. The legal group and the fiscal unity do not necessarily have to have the exact same scope. However, which companies actually become part of the fiscal unity must be determined consciously and clearly.

What happens after the application?

The tax inspector decides on the request for a fiscal unity by issuing a formal decision. This decision is subject to objection.

In principle, there is a maximum period of eight weeks for making the decision. If the inspector cannot decide within that period, they must notify you and indicate a reasonable timeframe within which the decision will be issued.

A positive decision provides the companies involved with advance clarity that, and from what date, they form a fiscal unity according to the decision. This is important because a fiscal unity is not just an administrative choice, but a legal regime subject to specific conditions.

The decision is also relevant in the event of a rejection. An objection and, if necessary, an appeal can be filed against a rejection. If it ultimately turns out that the request was wrongly rejected, the fiscal unity can still be effected as of the date that would have applied had the original request been handled correctly.

A decision does not mean that every condition is automatically approved

One of the most important points of attention regarding the fiscal unity is the legal significance of a positive decision.

It is tempting to think that a startup does not need to look at anything else after receiving the decision. After all, the Tax and Customs Administration has approved the application. However, the system does not work that way.

A fiscal unity can only exist if the legal conditions are actually met. A positive decision cannot independently create a fiscal unity if an essential legal requirement is missing.

This is relevant, among other things, to the 95% ownership requirement and the place of residence of the companies involved. These are precisely the conditions that an inspector cannot always fully verify independently when processing a standard application.

The decision therefore provides legal certainty, but it is not a substitute for the statutory requirements.

For startups, this means the application should not become a box-ticking exercise. When the structure is more complex than a holding company with a wholly-owned subsidiary, sufficient attention must be paid to the facts behind the answers provided on the application form.

Complete information becomes extra important

The position can be more nuanced when a positive decision has been issued, but a dispute subsequently arises over whether all conditions were met. Under certain circumstances, a taxpayer can derive legitimate expectations from a fiscal unity decision.

For this to apply, it is important that the tax inspector had access to the necessary facts and circumstances. If incorrect or incomplete information was provided due to intent or gross negligence, one cannot simply rely on expectations supposedly created by the decision.

Furthermore, if the decision is so clearly in conflict with a correct application of the rules that the taxpayer should have understood this, a claim based on legitimate expectations is unlikely to succeed.

The responsibility for providing information therefore does not lie solely with the Tax and Customs Administration. The taxpayer is expected to ensure the inspector receives all reasonably available information necessary to assess whether the conditions for the fiscal unity are met.

For startups, this is particularly relevant when the reality behind the cap table is more complex than the form suggests. A closed "yes" or "no" question may seem simple, while the contractual agreements surrounding the shareholding are significantly more complex.

In such a situation, it is risky to assume that a positive decision automatically resolves the underlying issue. The quality and completeness of the information provided during the application remain relevant.

Even an approved fiscal unity may require renewed attention

The conditions for a fiscal unity must not only be assessed at the start; they are also relevant to its continued existence.

If the conditions for forming a fiscal unity are no longer met, the fiscal unity may terminate. The question of whether the structure still qualifies may therefore arise again as the company evolves.

This means that for a fast-growing company, the fiscal unity is not a one-time administrative project.

A new investment round can change shareholder ratios. An acquisition can add new companies to the group. A change in legal form or international structure can also affect the conditions. Not every change automatically impacts the fiscal unity, but changes that touch upon statutory requirements warrant a new assessment.

In particular, the distinction between formal control on paper and the full economic interest behind the shares can be important.

Foreign structures require extra attention

The fiscal unity regime is not open to every foreign group company without restriction.

Certain entities incorporated under foreign law can be part of the arrangement under specific conditions, where factors such as legal form and the relevant international context play a role. There are also rules for foreign taxpayers with a Dutch permanent establishment and for certain structures involving parent and intermediate companies.

For a startup working exclusively with a Dutch holding company and Dutch operating companies, this international dimension may be limited. For scale-ups, this often changes as soon as foreign investors, international holdings, or cross-border acquisitions appear in the structure.

It is unwise to assume that a foreign company can be treated for tax purposes in the same way as a Dutch BV. The fiscal unity regime sets its own requirements for which entities can act as a parent or subsidiary.

A change in the legal form of a foreign group company can also be relevant. Qualification for the fiscal unity must align with the specific rules that apply to this regime.

What should a startup check before applying?

For a startup, a proper assessment begins with the actual group structure. Which entity should be the parent company, which subsidiaries should be included, and from what date should this take effect?

Next, you must verify whether the legal forms involved qualify, whether the establishment requirement is met, and whether the periods and profit determination rules align. The 95% requirement then deserves separate attention. It is not just the percentage of shares that is relevant, but also the economic position associated with that interest.

In the case of a recent acquisition or a new subsidiary, the application deadline must be reviewed immediately. According to the general rule, anyone wishing for an earlier effective date has a maximum of three months of retroactive leeway from the moment the request is submitted.

Finally, the information in the application must match the actual situation. When contractual agreements, options, or other rights influence the economic interest in the shares, it may be too significant to rely solely on a standard answer on the form.

At Startup-Recht, we therefore view the fiscal unity primarily as a topic that sits at the intersection of tax law and legal group structure. The cap table, transaction documentation, and corporate setup can be directly relevant to whether the desired tax structure is actually feasible.

Fiscal unity for startups: not an automatic process, but a deliberate choice

A fiscal unity for corporate income tax can be suitable for a startup or scale-up with multiple group companies, but only when all applicable legal requirements are met. A holding structure or a 100% shareholding does not in itself mean that a fiscal unity exists.

Three points in particular deserve attention. The fiscal unity must be applied for in a timely manner, the 95% requirement must be assessed in terms of substance and not just administratively, and a positive decision does not negate the fact that the legal conditions must actually be fulfilled.

For growing tech companies, it is therefore wise to put the fiscal unity back on the agenda during an investment, acquisition, or restructuring. Assessing the tax position at the same time as the legal group structure prevents a short application deadline or an unexpected agreement regarding share rights from only coming to light afterward.

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