Trading losses

In the Netherlands, trading losses realised on a business asset can in general be utilised with taxable profits. An important exception relates to losses realised on shareholdings to which the participation exemption applies (see paragraph “Participation exemption”). Unless otherwise restricted, tax losses incurred by a company in a particular tax year may be carried back against profits of the preceding year and carried forward for the following nine years. For the year 2010 (and 2011) the Dutch Ministry of Finance introduced a temporary option which makes it possible to opt for tax los carry-back for two additional years (total of three years). The tax loss carry-forward will then be maximized to six years. The amount of tax losses that can opt for the broader loss utilization is limited to a maximum of € 10,000,000 per year.

Particular restrictions regarding carry forward and carry back apply to losses realised by holding and finance companies. Losses may also be utilised within a corporate group under the fiscal unity regime described above under ‘Group tax consolidation (fiscal unity)’. In this context, restrictions can apply, in particular as regards losses incurred prior to or subsequent to fiscal unity membership. The general carry-forward or carry-back of losses may be restricted if ownership of the company has changed by 30% or more between the loss-making year and the profitable year. This rule does not apply in a number of situations, including where the company is not involved in passive investment and has not ceased or significantly reduced its activities, or where the ownership change merely represents an expansion of an existing holding of one-third or more of the shares.