Dutch tax group rules functional currency request was untimely

The Kennisgroep bijzondere winstbepalingen vpb has ruled that a request by Y BV to use a functional currency other than the euro was not submitted in a timely manner following its separation from a fiscal unity.

Y BV was separated from the fiscal unity of X BV for corporate income tax purposes effective January 15, 2025, becoming an independent taxpayer. On March 16, 2025, Y BV requested to calculate its taxable amount in a different currency starting from the date of separation.

Under the functional currency regulation, an approved request takes effect in the year following the year in which the request is made. The group determined that the request was not timely because it was made in the same year Y BV intended to use the new currency. While an exception exists for requests made in the year a tax liability begins, the group concluded that separation from a fiscal unity does not constitute the commencement of tax liability.