In his announcement, the State Secretary gave the example of Dutch fiscal unities between Dutch group entities with a common UK-resident shareholder. In a no-deal scenario, these fiscal unities would dissolve immediately as of 30 March 2019 because the shareholder must be resident in an EU member state in the absence of grandfathering rules. Continuing to treat the UK as part of the EU for the purpose of the fiscal unity rules until the end of 2019 would prevent this immediate dissolution.
The scope of the grandfathering rules is not clear yet. For instance, it is unknown whether they will also apply to EU directives as implemented in Dutch tax law, such as the Merger Directive, which provides for tax-neutral treatment of mergers in an EU context. Further details are to be published in the weeks leading up to 29 March and are expected to clarify this point.
For more information about the tax and other implications of a deal, or no-deal Brexit, click here.