Expected changes in Dutch international tax law

September 25th

The Dutch legislator is working on several changes in national tax law that may affect international taxation. Below we provide an overview of measures to be expected.

Implementation of European anti tax avoidance regulations

The member states of the European Union have agreed on the Anti Tax Avoidance Directive. It is now up to the member states to implement the directive into their national laws. In this respect, the Dutch secretary of state recently published a draft proposal. The draft focuses on ‘earnings stripping’ and ‘controlled foreign companies’. Also some changes in exit tax-regulations are suggested.

The draft does not address hybrid mismatches in EU- and third-country situations, because the imposed deadline for implementation of these measures has been deferred to 1 January 2020. The other changes are to come into force as of 1 January 2019.

Dividends withholding tax for cooperatives

Under current Dutch tax law, dividends paid by a cooperative may not be subject to Dutch dividends withholding tax. As this is considered unfair – and probably: not permitted by EC law – the difference in tax treatment between NVs/BVs and cooperatives will be ended. In that respect, ‘actual cooperatives’ would remain to be exempt from dividends withholding tax, whereas ‘holding company cooperatives’ would be required to charge dividends tax on their dividend payments.

The proposal comes with a plan for cross border situations. The withholding exemption for intercompany dividends will be extended to intercompany situations in which the parent company resides in a country with which the Netherlands has a tax treaty. Under circumstances, this would result in a zero Dutch tax rate.

The changes are planned to come into force as of 1 January 2018.

Dutch corporate tax liability for foreign entities

The Dutch corporate income tax regime for foreign entities will be changed. Foreign entities will be exempt from CIT on dividends received from entities in the Netherlands. As such, the foreign taxpayers will only be taxed for capital gains derived from the Netherlands. This reduction in tax liability will be compensated by a new anti-abuse rule in Dutch dividends withholding tax.

Fighting tax avoidance

In January 2017 the secretary of state suggested several measures in fighting tax avoidance. Recently it was announced that the proposal for these measures will be published shortly. The measures include the abolishment of the regulation that prevents penalties to taxpayers who voluntary report a gap in their taxation. The regulation was implemented many years ago to stimulate taxpayers to report failures in their taxation. It is considered that this stimulus is no longer required, due to increasing information exchange between tax authorities.

Further measures include a reduction of the right of redemption, publication of penalties imposed to tax professionals and extension of the liability for tax debts. Part of these measures are expected to come into force as of 1 January 2018.