Tax Position of Companies in Distress

Abstract

In this article, the loss relief rules for companies established in the Netherlands are discussed in light of current developments in legislation, case law and literature. The article discusses loss relief rules within a year and beyond a year. The loss relief rules within a year governing the recognition of losses on assets that affect the annual taxable result. The tax consequences of a write-down on a receivable, a participation loss, a liquidation loss and the possibility introduced by the legislator to offset COVID-19 related losses by creating a reserve are explicitly discussed. The loss relief rules beyond a year are the losses still to be set off determined by decree at the end of the fiscal year (relievable losses). Various subsections deal with loss relief periods, loss relief deferral (verliesverrekeningstemporisering), holding company losses, trading in loss entities, loss relief in mergers and demergers, and the single-fiscal unity regime. The article ends with a concluding observation.