Not applicable for this jurisdiction.
For income tax purposes, an Australian head company of a wholly owned group of Australian resident entities can elect to consolidate with its wholly owned Australian subsidiaries and form a consolidated group. For a consolidated group, the group is treated as a single taxpayer and intra-group transactions are ignored for income tax purposes.
Goods and services tax (GST) grouping and payroll taxes grouping are also available.
Group Taxation (Consolidation)
In 2005, a new system of group taxation (Gruppenbesteuerung) was introduced. The system of group taxation allows allocating profit or loss of domestic members of such tax group to the holding company, which is the only taxpayer for the whole group with respect to corporate income tax. In addition, losses from foreign directly held subsidiaries may be utilized against Austrian income, subject to certain requirements and restrictions, but have to be recaptured if utilized in subsequent periods in the foreign jurisdiction.
In general, the only requirements for becoming a group member of a tax group is a direct or indirect major shareholding in a corporation and the execution of a group consolidation contract. However, there are certain additional provisions for foreign entities. Furthermore, the group members must apply for group taxation with the competent tax authorities. A tax group must be in existence for a period of at least 3 years. If a group member withdraws from the group before this period has elapsed, such group member's tax will be assessed as if it never had been a group member.
Excessive Interest (interest barrier)
The new Section in the Corporate Income Tax Act , entitled "Zinsschranke" (interest barrier), is intended to implement the provisions of Art 4 ATAD2 limiting the deductibility of interest payments into national tax law, for the purpose of determination of the arm’s length nature of related party financing. These provisions aim to combat any profit shifting by groups of companies in the form of excessive interest payments by limiting the deductibility of excess debt capital costs.
§ 12a Corporate Income Tax Act sets out the basic rule of the interest barrier, according to which excess interest is only deductible to the extent of 30 percent of the taxable EBITDA or contains an tax-free amount of EUR3 million, i.e. excess interest up to this amount is to be immediately deductible as a business expense regardless of the amount of the taxable EBITDA. Any financing expenses in excess of the aforementioned amount will be non-deductible but can be carried forward.
Pursuant to the latest corporate tax reform, a corporate income tax consolidation regime has been introduced as of January 1, 2019 (assessment year 2020).
Brazilian tax legislation does not provide for consolidation.
Canada does not allow income tax returns to be filed on a consolidated basis for affiliated or related corporations.
Not applicable for this jurisdiction.
Consolidated tax filing of multiple enterprises is not allowed unless otherwise prescribed by the State Council. However, if a foreign company has more than 2 establishments in China, it may elect to have the main establishment in China make a consolidated tax filing for other establishments if it satisfies the conditions imposed by the PRC tax authority.
Not applicable for this jurisdiction.
Companies cannot file corporate income tax returns on a consolidated basis in Finland. However, Finnish companies that belong to the same group (which applies to share ownership of more than 90 percent of the shares) may exchange group contributions to facilitate tax consolidation on a company level. A group contribution is deductible for the paying company and is taxable for the recipient company.
The French tax consolidation regime allows a French parent company and its 95-percent-owned domestic subsidiaries to combine their profits and losses and to pay corporate income tax on the consolidated result. A French parent company indirectly owning at least 95 percent of French affiliates through 1 or more foreign companies based in the EU, Iceland, Norway or Liechtenstein (intermediary companies) can also form a tax group. Similarly, it is possible to set up a tax group between sister companies with the parent company established in the EU, Iceland, Norway or Liechtenstein.
Profits and losses of a controlled company are attributed to the controlling company if certain requirements are fulfilled and a profit and loss pooling agreement is entered into for a minimum period of 5 years. However, tax consolidation is only possible for subsidiaries with effective place of management in Germany.
Hong Kong, SAR
Although group companies in Hong Kong are, subject to certain exceptions, required to prepare consolidated hfinancials for accounting purposes, Hong Kong does not allow groups of companies to file consolidated profits tax returns. There is no group loss relief (eg, loss consolidation, loss transfer) for taxpayers in group companies.
Since 2019, taxpayers may opt for group taxation for corporate income tax purposes subject to certain conditions. Members of the tax group may offset losses against the profits of other members of the tax group concerned. The general corporate income tax rate is applicable to corporate income tax groups.
Consolidated tax returns are not permitted to be filed in India.
Certain loss reliefs can be grouped (see below). However, there is no concept of fiscal unity.
Companies with close organizational, financial and economic links may form a VAT group. All companies in the group are jointly and separately liable for the VAT of the group.
Filing consolidated tax returns is generally not permitted with a narrow exception in the case of "industrial companies."
Eligible corporations that are affiliated (generally based on at least 50 percent stock ownership) may elect to compute corporate income tax on a consolidated basis.
The consolidated taxation system is applicable to a group of Japanese corporations in which a Japanese corporation directly or indirectly owns 100 percent ownership of other Japanese corporations, and it is optional for applicable corporations. Under the current consolidation system, the consolidated companies are treated as if they are a single taxpayer for Corporation Tax purposes; however, in March 2020, it has been amended and integrated into the group taxation system, where each group company is treated as a separate taxpayer, but profits and losses are adjusted and offset among the group companies. The new group taxation system will come into force from the taxable year commencing after April 1, 2022.
A group of companies, under certain conditions, may apply the tax consolidation regime in Luxembourg. In practice, the tax consolidation regime enables the group to pool or offset the respective taxable profit of each company in the group and to be taxed on the aggregate amount (i.e. a group of companies is treated as a single taxpayer). Losses incurred by one company of a group may accordingly be offset by the profits realized by another group company.
The main requirements are the following:
- A minimum shareholding (95 percent) must be held without interruption from the beginning of the financial year to which the tax consolidation regime is applied
- Group companies must begin and end their financial years on the same date and
- The companies concerned must be grouped for at least 5 financial years.
Tax consolidation is requested jointly to the tax authorities.
A Mexican holding company may obtain an authorization to effectively compute income tax on a consolidated basis (called the integration regime as of 2014), but each company of the group is responsible for filing and paying the tax individually. This option is subject to several rules and limitations, including a recapture of benefits.
Companies may not elect to file corporate income tax returns on a consolidated basis and must file independently.
The Dutch tax consolidation regime allows a Dutch parent company and its 95-percent-owned domestic subsidiaries to apply for the consolidation regime. In addition, a tax consolidation is allowed between 2 Dutch sister companies that have the same EU parent company which owns an interest of at least 95 percent in both Dutch companies. Profits and losses of the subsidiaries are attributed to the Dutch controlling parent company. A Dutch parent company that indirectly owns at least 95 percent of Dutch affiliates through 1 or more foreign companies based in the EU, Iceland, Norway or Liechtenstein (intermediary companies) may also form a tax group. Similarly, it is possible to set up a tax group between sister companies with their parent company established in the EU, Iceland, Norway or Liechtenstein.
Norway does not have a tax consolidation system and hence separate entity taxation applies for income tax purposes.
However, companies belonging to the same group (which applies to share ownership of more than 90 percent of the shares) may exchange group contributions. A group contribution is deductible for the paying company and is taxable for the recipient company.
It is possible to consolidate for tax purposes within a tax capital group. Several requirements must be fulfilled, eg, an average capital of PLN500,000 for each group company, a minimum share of 75 in subsidiaries by the parent and a minimum income-to-revenues ratio of 2 percent.
Eligible corporations that are affiliated (generally based on at least 75 percent or more ownership of the statutory capital of the other affiliates and ownership of more than 50 percent of the voting rights) may elect to file corporate income tax returns on a consolidated basis.
Starting 2021, taxpayers may register for a corporate income tax consolidation group. The entities that are part of such a group must meet the following requirements:
- They are Romanian legal entities or have their head office in Romania;
- They are affiliated via an individual or entity owning, directly or indirectly, at least 75 percent of shares/voting rights in each entity;
- The individual or entity generating the affiliation is either a Romanian resident or resides in a state with which Romania has concluded a double taxation avoidance treaty or an information exchange treaty.
Consolidation is also available also for VAT purposes. However, different requirements apply.
Under federal law, the availability of a consolidated taxpayer group has been terminated with effect from January 1, 2023. No new contracts on consolidated taxpayer groups can be registered as of 2019. The tax consolidation registrations obtained in 2018 have been rescinded. The pre-2018 consolidated taxpayer groups will continue to operate until their expiration date, but in any event until January 1, 2023.
Singapore companies within the same group are required to file their corporate income tax returns separately.
Companies may not elect to file corporate income tax returns on a consolidated basis and must file individually.
Eligible corporations that are affiliated (generally based on 100% stock ownership) may elect to file corporate income tax returns on a consolidated basis.
Eligible corporations that are affiliated (generally based on at least 75-percent stock ownership or 70-percent stock ownership for listed companies and the majority of the voting rights) may elect to file corporate income tax returns on a consolidated basis. A Spanish group may apply tax consolidation when the dominant company is tax resident in a foreign country (horizontal consolidation) provided that it has legal personality, is taxed by a foreign tax identical or analogous to the Spanish corporate income tax, and is not resident in a tax haven.
In Sweden, it is not possible for companies to file corporate income tax returns on a consolidated basis. However, companies belonging to the same group, which applies to share ownership of more than 90 percent of the shares, may exchange group contributions. A group contribution is deductible for the paying company and is taxable for the recipient company.
Switzerland does not have a tax consolidation system, and hence separate entity taxation applies for income tax purposes. The Swiss VAT Act provides for group taxation for VAT purposes.
Consolidated returns may be filed by (i) a qualified financial holding company or (ii) a company which consummates a qualified merger, acquisition or spinoff transaction that holds at least 90 percent of the total issued shares of its Taiwan subsidiary for 12 consecutive months during a tax year.
Tax consolidation is not allowed under Turkish tax regime. Each company of a group must file a separate corporate tax return for itself.
No consolidated tax returns are envisaged. Consolidated financial reporting is obligatory for certain groups.
United Arab Emirates
Not applicable for this jurisdiction.
Eligible corporations may enter into a "group payment arrangement," whereby one company makes itself responsible for administering the corporation tax affairs of all members of the group. However, this is an administrative arrangement only, and all UK companies are required to file separate corporation tax returns, calculate their respective liabilities separately and remain liable for their own corporation tax.
Eligible corporations that are affiliated (generally based on at least 80-percent stock ownership) may elect to file corporate income tax returns on a consolidated basis.
There are no provisions in Zimbabwean law for the filing of corporate tax returns on a consolidated basis.