This section will provide a high level summary of three important developments in Dutch (international) tax law, that may be relevant for your business.
Changes to the Dutch dividend withholding tax regime
Following earlier communications, the Dutch government recently released a draft legislative proposal for consultation which provides for the following changes to the Dutch dividend withholding tax regime:
- distributions by so-called holding cooperatives (cooperatives whose activities predominantly exist of holding and/or financing activities) in respect of qualifying participations will become subject to 15% Dutch dividend withholding tax; and
- the scope of the current Dutch domestic exemption from dividend withholding tax for EU and EEA shareholders will be extended to qualifying shareholders/members that are resident in a country with which the Netherlands has concluded a double tax treaty, provided that (i) such tax treaty contains a dividend provision and (ii) the conditions of new anti-abuse rules are met. This exemption also applies to holding cooperatives.
We refer to our Tax Alert for detailed information. The actual legislative proposal is expected to be introduced later this year. The new rules should enter into force as per 1 January 2018.
Amendments to the EU Anti-Tax Avoidance Directive
On 29 May 2017 an EU Directive ("ATAD 2") has been adopted that amends the EU Anti-Tax Avoidance Directive (Directive 2016/1164, "ATAD 1") which provides rules to counter aggressive international tax planning. The amended Directive has a broader scope and now also covers so-called hybrid mismatches in relation to third countries and more categories of mismatches. The term mismatch covers a number of situations whereby in essence two states give a different qualification to an instrument or arrangement as a result of which either the same expenses are deducted more than once (i.e. double deduction), or expenses are being deducted but without the corresponding income being included in the taxable income (i.e. deduction without inclusion). ATAD 1 and ATAD 2 should for the most part enter into force, respectively as per 1 January 2019 and 1 January 2020. We refer to our Tax Alerts for ATAD 1 and ATAD 2 for detailed information. With respect to the implementation of ATAD 1 in Dutch law, the Dutch government has just released a consultation document. We refer to our Tax Alert for detailed information.
The Multilateral Instrument
On 7 June the Netherlands, together with over 60 other states, signed the Multilateral Instrument ('MLI'). In accordance with the recommendations of the OECD/G20 Base Erosion and Profit Shifting ('BEPS') project, the purpose of the MLI is to collectively update the existing bilateral tax treaties between countries that have signed the MLI. One of the most important changes the MLI provides, is the introduction of a general anti-abuse rule in the tax treaties between the signatories to the MLI. In addition, the MLI provides for improvements to the mutual agreement procedure in respect of differences of interpretation of a bilateral tax treaty. Furthermore, optionally, a range of specific anti-abuse rules may be included as well as mandatory arbitration. The Netherlands has elected to apply nearly all rules included in the MLI. However, whether a bilateral tax treaty concluded by the Netherlands will be amended in accordance with the elections made by the Netherlands, will depend on whether the relevant treaty partner has signed up to the MLI and made the same elections. The MLI is expected to enter into force as per 1 January 2019 at the earliest. We refer to our Tax Alert for more details.