social

social

social

social

social

Schiphol Amsterdam Airport
Le Carré B, 4de etage
Beechavenue 174
1119 PS Schiphol
T +31 (0) 20 3080 580

Den Haag
Park de Wervelaan 13
2283 TN Rijswijk
T +31 (0) 70 2156 300

E info@blueclue.nl

Latest News

News

The Netherlands - 2018 Budget Proposals

Tax alert September 2017 – multinational companies

The Netherlands - 2018 Budget Proposals

On 19 September 2017 the Dutch Ministry of Finance published its tax budget proposals for 2018.  One of the most important changes regards the reduction of the Dutch Dividend Withholding Tax (DWT) to nil for international business activities. Below we will explain these changes and we will address the remaining proposed changes relevant for multinational companies. We note that the proposed changes may be subject to some amendments. Voting in the Dutch Parliament is scheduled for 16 November 2017.

Dividend Withholding Tax reduced to nil for business structures

In accordance with earlier announcements it is proposed to expand the DWT exemption (0% rate) to foreign shareholders owning at least 5% of a Dutch company even in case the applicable tax treaty stipulates a higher DWT rate. This exemption is an important step in further strengthening the Dutch fiscal climate for multinational companies. A ruling can be obtained from the Dutch tax authorities in order to confirm the 0% DWT rate. In case the 0% DWT rate is applied information regarding the dividend will need to be supplied to the tax authorities within one month after the dividend declaration.

On the other hand the DWT anti-abuse provisions will be brought in line with the principle purpose test (PPT) of the MLI (BEPS project). Note that this amendment can (unexpectedly) increase the Dutch DWT rate on future dividends, in particular in the situation (in)direct shareholders are not considered to be involved in business operations or does not meet certain newly introduced minimum substance requirements for intermediate holding entities.

We recommend to check if the proposed changes result in opportunities or disadvantages for the DWT position of a multinational group. We note that even in the situation that the shareholder is located in a non-tax treaty country the new 0% DWT rate can be obtained after a partial restructure.

Cooperative entities become subject to Dutch dividend withholding tax

Cooperatives are frequently used in Dutch international tax structures to avoid DWT since these entities are not DWT taxpayers provided certain requirements are met (which are in line with the PPT as mentioned in the previous paragraph). As from 2018 cooperatives will become subject to DWT if they predominantly (for 70% or more) operate as a holding or a financing company. After this amendment the DWT treatment of such cooperatives is in line with the DWT treatment of Dutch limited liability companies (BV/NV) for which also a DWT exemption can be available as from 2018 (we refer to the previous paragraph).

We recommend to check the DWT position of a cooperative in case it predominantly acts as a holding or financing company in the group.

Amendment of the tax treatment of certain charges relating to foreign branches

Under the current Corporate Income Tax (CIT) Act certain internal charges (i.e. royalty, rent, lease) due within a fiscal unity relating to a foreign branch can be eliminated (for determining the exempt foreign branch profit) while these charges can be deducted from the local branch profit. The Dutch Supreme Court has approved this treatment. In this respect we note that the Dutch CIT already includes an anti-abuse measure for interest expenses whereby a deduction of interest expenses is taken into account for determining the exempt branch profit instead of eliminating such charge within the fiscal unity. This anti-abuse measure will be extended to all intercompany charges (i.e. royalty, rent, lease) as from 2018.

We recommend to check the calculation of the exempt branch profit in case a foreign branch (permanent establishment) is held by a Dutch company forming part of a fiscal unity for Dutch CIT purposes with other Dutch companies.

Increase of 10A counter evidence requirements in case of third party financing

The Dutch CIT Act includes various measures to avoid the deduction of excessive interest expenses. One of the measures regards the deduction of intercompany interest relating to certain transactions such as acquisitions, capitalization of participations and dividends (article 10A CIT Act). Specific counter evidence rules exist to mitigate an adverse effect of this measure on the Dutch tax position. Under one of the counter evidence rules the taxpayer is able to substantiate that the loan and the transaction are based on business reasons. Based on the current policy these business reasons are deemed to exist if a link with a third party financing is available (emphasizing that article 10A aims to avoid the deduction of interest on intercompany loans). As from 2018 this possibility will be cancelled. As a result also in case the loan is ultimately financed by a third party loan the business reasons of the intercompany loan and the transaction need substantiation for applying this counter evidence rule.

Amendment of tax facilities to deduct losses in order to avoid misuse

Under the Dutch CIT Act losses realized upon the liquidation of a (foreign) participation is deductible for CIT purposes if various requirements are met. These losses can be fully off set against other profits. This rule is beneficial because normally the profits and losses from participations are exempt if the participation exemption applies. The deduction of liquidation losses is an exception to this rule.

In practice structures has been set-up aiming to artificially increase the liquidation loss by setting-up a series of transactions whereby an intermediate holding entity (owning the participation to be liquidated) is excluded from a Dutch fiscal unity. This accidental use is prevented by an amendment of the CIT Act.

Another repair measure regards the realization of a loss on an intercompany loan relating to an entity of which the operational losses have already been taken into account within a fiscal unity. As from 2018 these loss situations need additional attention. 

Country by country reporting and voluntary filing

As from 2016 Dutch group companies (including branches) of a multinational group with a turnover of at least EUR 750 mio needs to file a country-by-country report (cbc report) with the Dutch tax authorities. This would not be necessary if the parent company is already required to meet this requirement based on its local tax regulations. As from 2018 the current policy that a voluntary filing of the cbc report by the parent company will be sufficient as well will be included in the Dutch CIT Act. The Dutch group company will need to notify the Dutch tax authorities which group company files the cbc report on its behalf prior to the end of the each book year (online link).

This change is relevant for countries that did not introduce cbc reporting requirements yet, such as US, Switzerland, Japan and Hong Kong.

We recommend to review if all the cbc requirements are met if a Dutch company is part of a multinational group with a turnover of at least EUR 750 mio. Further, we note that upon the filing of the 2016 CIT return a Master and a Local File will need to be available in the Netherlands substantiating the transfer pricing position. Note that this latter requirement exists if the Dutch company is part of a multinational group with a turnover of at least EUR 50 mio.

Increase of the lower 20% corporate income tax bracket 

Currently, the Dutch CIT rate is 25% for profits exceeding EUR 200k and 20% for profits until EUR 200k (2017). It is proposed to increase this 20% tax bracket to EUR 250k (in 2018), EUR 300k (in 2020) and EUR 350k (in 2021).

Will dividend withholding tax between Netherlands and Curaçao go down?

Recent news of Blue Clue

Will dividend withholding tax between Netherlands and Curaçao go down?

Netherlands and Curaçao have reached an agreement on the new rules on the avoidance of double taxation between the Netherlands and Curaçao. For Curaçao the exemption of dividend withholding tax is important. To prevent avoid abuse the shareholder on Curaçao will have to meet extra conditions.

Read more: Will dividend withholding tax between Netherlands and Curaçao go down?

Submit your EU VAT refund request before October 1st

Recent news of Blue Clue

Submit your refund request for VAT paid in other EU Member States

Have you paid VAT in other EU Member States than you can reclaim this by submitting a refund request prior to October 1st of the following year and if you meet the conditions. For a whole year the threshold is € 50 per EU Member State. You can submit refund requests during the year after each quarter, if the refund exceeds € 400.

Read more: Submit your EU VAT refund request before October 1st

Object against 16% employers crisis tax!

Recent news of Blue Clue

Object against 16% employers crisis tax for 2012 salaries in access of € 150.000

In April 2013 a one-time employer levy of 16% is due on wages (including bonuses, benefit in kind, et cetera) that exceed € 150,000 in 2012. The levy is also applicable to employees who are shareholder of the employer as well. A recent court case gives ground to object successfully against this crisis levy.

Read more: Object against 16% employers crisis tax!

16% employers tax for salaries in access of € 150.000

Recent news of Blue Clue

16% employers levy for salaries in access of € 150.000

In the 2013 Budget Agreement a one-time employer levy of 16% is due on wages (including bonuses, benefit in kind, et cetera) that exceed € 150,000 in 2012. The levy is also applicable to employees who are shareholder of the employer as well.

Read more: 16% employers tax for salaries in access of € 150.000

Submit your EU VAT refund request before October 1, 2012

Recent news of Blue Clue

Submit your refund request for VAT paid in other EU Member States

Have you paid VAT in other EU Member States in 2011 than you can reclaim this by submitting a refund request prior to October 1, 2012 and if you meet the conditions. For a whole year the threshold is € 50 per EU Member State. You can submit refund requests during the year after each quarter, if the refund exceeds € 400.

Read more: Submit your EU VAT refund request before October 1, 2012

Netherlands number 4 with highest income tax rate

Recent news of Blue Clue

Research KPMG 2011: Netherlands has fourth highest personal income tax rate

Although the Netherlands is attractive for businesses, the top rate for personal income tax is the fourth highest in the world.

Read more: Netherlands number 4 with highest income tax rate

Report on taxation of headquarters

Recent news of Blue Clue

Report on corporate taxation of headquarter services in Europe

VU University Amsterdam published this report, which provides insights into the current tax treatment of group headquarter (HQ) services in the Netherlands, Ireland, the United Kingdom and Switzerland. The study focuses on the taxation of holding companies, financing and treasury companies, research and development activities and the exploitation of intellectual property.

Read more: Report on taxation of headquarters

Inter-company financing: beware of non-deductible interest

Recent news of Blue Clue

Inter-company financing: non-deductible interest

Avoid that interest is not deductible by the debtor and is taxed at creditor. These are expensive loans. A recent decision made clear that repairing the loan terms retrospectively does not always work.

For complete text refer to the link.

Read more: Inter-company financing: beware of non-deductible interest

European Parliament wants Member States to change tax treaties and the EU to change the Parent-Subsidiary Directive and the Interests and Royalties Directive!

The European Parliament yesterday adopted a resolution whereby the European Parliament urges the European Commission and EU member states to take measures against tax fraud and tax evasion.

For example the European Parliament wants Member States to change their tax treaties and the EU to change the Parent-Subsidiary Directive and the Interest and Royalty Directive!

For complete text refer to the link.

Most notable of the resolution we find:

  • automatic exchange of information for taxation of savings;
  • an end to banking secrecy;
  • further agreements about this with Switzerland;
  • a common consolidated corporate tax base to combat tax fraud
  • stricter regulation of company registries;
  • stricter registration of registres of trusts;
  • change of the Parent-Subsidiary Directive and change of the Interests and Royalties Directive to combat tax evasion through hybrid financial instruments in the EU;
  • implementation of new and innovative strategies to combat VAT fraud in the EU
  • Member States revise their tax treaties insofar as they contribute to tax evasion and complicate effective withholding tax in certain Member States;
  • greater transparency and stricter controls to prevent the use of tax havens, which do not tax or use nominal rates, do not exchange information and where the legislative, legal or administrative provisions are not transparent.

Relevance to practice
It is a call only and not yet law, but it reflects a trend that for corporate and financial structures content, substance, material reality will become more and more important than it already is. Since ages the Netherlands concludes tax treaties to enhance doing business abroad and to avoid double taxation. The EU want the same for trade adn finance between Member States. The European parliament is now of the opinion that the rules have led to abuse. We are curious to what this call will lead and what the consequences will be for companies doing business in the EU.

Click for the entire source text adopted. Source: Resolution European Parliament P7_TA(2012)0137