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Knowledge - Tax advisory

Tax Consequences of the Termination of 'Open' CV

The open limited partnership - also known as open CV - will cease to exist as a separate entity subject to corporate income tax as of January 1, 2025.



The change is intended to reduce the number of hybrid mismatches internationally. Due to a difference in the qualification of legal entities by two countries, this can result in income being subject to taxation twice (at the entity level, the CV, and with the underlying participants, in this case, the beneficiaries of the CV) or not taxed at all.

Under current legislation, a tax distinction is made between the open and closed limited partnership (CV). The open CV is subject to independent taxation and is taxed on its profits with corporate income tax. The closed CV is fiscally transparent and is not subject to independent taxation, but its profits are included in the income or corporate income tax of its partners.

Tax Consequences of the Termination of 'Open' CV

The distinction between the 'open' and 'closed' CV will cease as of January 1, 2025, based on the bill on Fiscal Qualification Policy for Legal Forms, by eliminating the consent requirement for the classification of legal forms.

This brings about tax consequences:

  • The tax liability for corporate income tax ends;
  • This leads to settlement over the silent, fiscal reserves, and (self-generated) goodwill.
  • Disposal of the interest of the participants in the open CV;
  • If the interest qualifies as substantial interest, capital gains tax is due in box 2 on the appreciation.
  • This distinction is, under current and future law, only relevant for the profit attributable to the limited partners. For managing partners, a CV is already fiscally transparent under current law. The profit share of the limited partner is equated with a share and can therefore be part of a substantial interest, and furthermore, an open CV is subject to withholding tax on dividends under current law.

Transitional law and action 2024

All of the aforementioned tax consequences lead to immediate taxation. For open CVs established before the announcement of the bill (Tuesday, September 19, 2023, 15:15), these consequences are considered undesirable.

The facilities provide the opportunity to defer taxation to the participants or a holding company. In addition, a payment facility is included, allowing the payment to be spread over ten years.

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