A group of companies is not the same as a tax group. We explain the differences.
Given that special conditions apply to commercial transactions between companies in the same business group, groups of companies have different accounting and tax treatment .
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What is a group of companies?
According to article 42 of the Commercial Code , a group of companies exists when a company holds or may hold, directly or indirectly, control over another or others. Control will be presumed to exist when a dominant company is in relation to another dependent company in any of the following situations:
Possess the majority of voting rights.
Have the power to appoint or dismiss the majority of the members of the governing body.
May have, pursuant to agreements entered into with third parties, the majority of voting rights.
The majority of the members of the governing body have been appointed by their votes and will be in office at the time when the consolidated accounts are to be drawn up and during the two previous financial years. This circumstance shall be presumed when the majority of the members of the governing body of the controlled company are members of the governing body or senior managers of the controlling company or of another company controlled by it.
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Accounting treatment of the business group
Transactions between companies belonging to the same freight forwarders brokers email lists business group have a different accounting treatment than that applied to accounting transactions between companies without any dependency. This is because they are related-party transactions.
Companies that belong to a business group must prepare and present, in addition to their corresponding individual accounts, consolidated financial statements as if they were a single economic unit .
The consolidated annual accounts consist of the following documents:
Consolidated Balance Sheet.
Consolidated Profit and Loss Account.
Consolidated Statement of Changes in Equity.
Consolidated Statement of Cash Flows .
Consolidated report.
Tax treatment of the group of companies
Business groups are required to submit their consolidated annual accounts. This has an impact on the tax treatment of profits or losses obtained by these companies, if they are subject to the tax consolidation regime.
