This article is related to:

Corporate income tax: limitation on offsetting losses against profits

This information is provided by

Netherlands Enterprise Agency, RVO

Effective date: 1 January 2021

What changes?

Companies may suffer losses when a subsidiary ceases their activities (liquidation losses) or if an activity abroad ends (cessation losses). In most cases comapnies can offset these losses with the profts they gain in the Netherlands. There will be a change in the way you can offset these profits and losses against each other for corporate income tax (VPB) purposes.

As of 1 January 2021 new conditions are set:

  • limitation in time: liquidation or cessation losses should be taken within 3 years of ending (there was no time limit)
  • limitation in origin: only liquidation or cessation losses from within the EU or EEA are deductible (there was no limit on country of origin)
  • limitation in association (only applicable to liquidation losses): liquidation losses are only deductible if control in the subsidiary is substantial, in general this is an interest of 50% (this used to be a minimum of 5%)

Limitation in time and origin only apply if the liquidation or cessation losses exceed €5 million. This means only large amounts of these losses are affected by this change.

For whom?

  • Entrepreneurs wanting to offset losses and profits against each other for corporate income tax purposes

When?

The change in law has come into force on 1 January 2021.

This article is related to:

This information is provided by

Netherlands Enterprise Agency, RVO