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Project

Taxation of corporate groups under the Belgian corporate income tax system

The rise of corporate groups has challenged the traditional corporate income tax system under which each company is considered an autonomous legal entity and is taxed accordingly. The underlying rationale is that each independent economic activity presupposes an independent legal entity. Hence, legal reality coincides with economic reality. The same rationale cannot apply to corporate groups as the constituting group companies are merely part of the corporate group as a whole. Consequently, the relevant economic profit is the overall profit realised by the overall performance of the group and thus not the profit realised by each individual company, despite the latter being taken into account for taxation purposes. To resolve the distortion between taxation and economic reality, many States have felt the need to adopt group taxation regimes, which fiscally recognise corporate groups. However, in the Belgian corporate income tax system corporate groups do not constitute taxable entities, nor are they recognised for taxation purposes. Although various provisions of the Belgian corporate income tax code factually take into account corporate groups, they have not fully resolved the diverse group taxation problems, such as transfer pricing issues. The proposed research intends to examine how the Belgian corporate income tax system should deal with legally independent companies that constitute in fact a corporate group. The working hypothesis is that a distortion between taxation and the economic reality of corporate groups is not desirable and needs to be resolved by the implementation of a consolidation regime.

Date:1 Sep 2017 →  Today
Keywords:Taxation of corporate groups
Disciplines:Law
Project type:PhD project