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Under Dutch tax legislation, Dutch tax resident sister companies can not form a fiscal unity if their parent company is a resident of a non-European Economic Area (EEA) country, such as Brazil or Mexico. In a court proceeding conducted by Baker McKenzie, the Dutch Court of Appeal has ruled that this is in violation of the non-discrimination article as laid down in the tax treaty between Israel and the Netherlands. This important ruling expands the fiscal unity possibilities to structures in which the parent company or intermediate holding company is a non-EEA tax resident, provided that the applicable tax treaty contains a non-discrimination article. Since there is a non-discrimination article in the tax treaties concluded between the Netherlands and Brazil and the Netherlands and Mexico there could be possibilities for Brazilian and Mexican structures to also make use of the Dutch fiscal unity regime.

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