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Tackling Reverse-Hybrid and Entity Classification Mismatches In the Netherlands

Tackling Reverse-Hybrid and Entity Classification Mismatches In the N

Tackling Reverse-Hybrid and Entity Classification Mismatches In the Netherlands

29.07.2021 NL law

This article, published in Tax Notes International, examines two recent Dutch proposals, which could have an immediate impact on Dutch and non-Dutch corporate taxpayers and existing national or international structures.

On March 4 the Dutch government started a public internet consultation by releasing two draft bills of law and explanatory memoranda. One of the proposals in the consultation documents targets so-called reverse-hybrid mismatches. The proposed rule tackles the result (double deduction or deduction without inclusion) of reverse-hybrid mismatches and is the final part of the implementation of the EU anti-tax-avoidance directive (ATAD 2, or Directive (EU 2017/952, amending Directive (EU) 2016/1164).

In addition to the proposed reverse-hybrid rule, on March 29 the Dutch government released another consultation document containing a draft bill of law and explanatory memorandum to amend the Dutch classification rules for specific domestic and foreign legal entities. This proposal aims to tackle the cause of hybrid entity mismatches in which the Dutch classification of domestic and foreign legal entities don’t match, and the classification of those entities in other jurisdictions. The proposal further aims to bring the Dutch classification rules more in line with common international classification standards.

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Auteurs: Charlotte Tolman and Michael Molenaars

Source: Tax Notes International, volume 102, number 7

Publication date: May 17, 2021

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