The VAT group: holding and operating company as one entrepreneur
Written by Ilias Aarrass6 min read · Last reviewed on 
Written by Ilias Aarrass6 min read · Last reviewed on Anyone who set up a two-company structure after reading why a holding soon discovers an administrative by-product: the holding invoices a monthly management fee to the operating company, with VAT, which that company then reclaims. Pumping in circles. The VAT group ends it: the companies count together as one VAT entrepreneur, internal supplies stay outside VAT and filing can be done once. You must meet three intertwinement tests, and accept that the companies become liable for each other's VAT debts.
The three intertwinement tests
A VAT group arises between Netherlands-established entrepreneurs who are financially, organisationally and economically intertwined. Financially: a majority of shares, more than half, in the same hands directly or indirectly; a holding owning 100% of the operating company passes automatically. Organisationally: one common management, for instance the holding acting as director. Economically: the activities serve the same economic goal or complement each other, such as a holding managing the operating company for a fee. Important: the holding must itself be a VAT entrepreneur, actually supplying for payment; a purely passive shareholder does not qualify.
What it delivers
The benefits are mainly practical:
- Internal invoices, such as the management fee and recharged costs, stay outside VAT: fewer invoices, less money pumped around.
- One VAT return for the whole group becomes possible, instead of one per company.
- No VAT friction when one part performs (partly) exempt supplies and VAT on the management fee would otherwise stick.
How the group starts and ends
The group exists once the tests are met, but certainty comes from having it confirmed by decree: a short request to the tax authority describing structure and intertwinement. From the decree the group applies formally, you can file one return in the group's name if desired, and everyone knows where they stand. If the structure changes, say the operating company is sold or the management activity stops, report it immediately: liability continues until the tax authority knows the group ended. And mind the distinction with the corporate income tax group: a separate regime with different tests (95% of shares) and its own request; one exists fine without the other.
Frequently asked questions
Is a VAT group mandatory once I meet the tests?
The group can exist without a decree once the intertwinement factually exists; the tax authority can even establish it retroactively. Which is exactly why requesting a decree yourself is wise: you set the starting point and prevent discussions afterwards.
Do I stop invoicing the management fee altogether?
You keep charging and recording the fee, just without VAT; civilly and for corporate tax an arm's-length, documented fee remains necessary. Only the VAT component disappears from internal invoices.
Can my sole proprietorship form a VAT group with my company?
No. A natural person can only join a VAT group when intertwined as an entrepreneur with the companies, which rarely applies in an ordinary director-shareholder structure. In practice it almost always concerns companies among themselves.
What does the group mean for invoices to external clients?
Nothing: externally each company invoices under its own name and VAT number, with VAT per the normal rules. The group works only internally and in the return.
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
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