The Dutch Tax Authorities clarified that for internal transfers of low-tax group entities, the income inclusion surcharge (IIR) under Article 4.2 WMB 2024 is calculated pro rata, making each parent liable only for the period it controlled the entity.
The Netherlands Tax Administration has issued a guidance 15 December 2025 on calculating the amount of income inclusion top-up tax also known as the income inclusion rule (IIR), in the event of an internal transfer of a low-tax group entity between parent companies within the same group.
Under Article 4.2 of the Minimum Tax Act 2024 (WMB 2024), the IIR surcharge is calculated pro rata for each parent entity based on the period during which it holds a controlling interest in the low-tax group entity. The calculation is derived from the net profit or net loss earned by the entity during that period.
For example, if a low-tax entity reports a net profit of EUR 1,200 in a reporting year and is transferred to another parent entity on 1 April, the portion of the additional tax attributable to the original parent would be based on the income earned from January to March. The remainder of the year’s surcharge would be allocated to the acquiring parent entity. If the initial period reflects a net loss, only the net profit period is considered, meaning the full IIR amount could be allocated to the acquiring entity.
The clarification aligns with the OECD Model Rules and the Pillar 2 global minimum tax framework, which aim to ensure consistent and coordinated application of the IIR across jurisdictions.
Unlike external transfers, which are already reflected in consolidated financial statements, internal transfers require this pro rata approach to prevent double taxation and ensure equitable treatment between parent entities.
According to the explanatory memorandum to the WMB 2024, there are no conditions on holding an interest, meaning the IIR can apply even when an entity is purchased or sold during the reporting year.
The guidance confirms that in internal transfers, the income inclusion surcharge is allocated based on the actual period of ownership, ensuring compliance with both Dutch law and international tax standards.
