Short Reads

Dutch Under-Minister of Finance clarifies expected changes to the Dutch CIT fiscal unity regime

Dutch Under-Minister of Finance clarifies expected changes to the D

Dutch Under-Minister of Finance clarifies expected changes to the Dutch CIT fiscal unity regime

24.04.2018

In his letter (the “Letter”) of 20 April 2018 the Dutch Under-Minister of Finance has answered questions raised by a member of the Second Chamber of Parliament regarding the Dutch corporate income tax (“CIT”) fiscal unity regime. 

As already reported in the Stibbe Tax Alert of 22 February 2018, following two recent rulings from the European Court of Justice which – in short - obliged the Netherlands to let taxpayers cherry pick benefits from the fiscal unity regime, the Under-Minister of Finance confirmed that the regime will be amended with retroactive effect to 25 October 2017 at 11.00 hours and that a legislative proposal (the “Urgent Legislative Proposal”) will be published in the second quarter of 2018.

In the Letter the Under-Minister of Finance acknowledged that introducing the amended regime with retroactive effect may indeed have certain undesirable consequences. Therefore, the Under-Minister has now announced a temporary transitional rule (the “Transitional Rule”). According to the Transitional Rule, under certain conditions the Urgent Legislative Proposal will not apply to interest - including costs and currency exchange results – in relation to the anti-base erosion rules of article 10a of the Dutch CIT Act limiting interest deductions on related party debt for the period until and including 31 December 2018. The most important conditions are that both the debt which is legally or de facto - directly or indirectly - due to a related entity or individual and the tainted transaction to which the debt related already existed on 25 October 2017 at 11.00 hours. In addition, the amount of the interest on the total debt may not exceed during a twelve month period an amount of Euro 100,000. If this cap would be exceeded, the full amount of interest would be non-deductible. Furthermore, if the tax inspector could demonstrate that the debt or the tainted transaction is not primarily based on business motives, the Transitional Rule will not apply.

The Urgent Legislative Proposal will in time be replaced with a new group relief arrangement which should be future proof both from a practical and legal perspective. Also in view of an attractive fiscal business climate, the Dutch Under-Minister of Finance will consult with businesses, relevant parties and scholars about such draft arrangement. It seems likely that the draft arrangement will be based on existing group relief arrangements in other countries. The consolidation approach as embedded in the current CIT fiscal unity regime will disappear. However, the most important element of the regime – to wit setting-off profits and losses between the entities included in the fiscal unity - will likely continue to apply.

We will provide an update when further developments regarding the Dutch CIT fiscal unity regime occur.

Stibbe contributes Dutch chapter to Chambers Global Practice Guides Corporate Tax 2018

Lastly we are proud to share with you the Dutch chapter of the Chambers Global Practice Guides Corporate Tax 2018, that was written by Michael Molenaars, Jeroen Smits, Reinout de Boer and Raymond Roumen. Besides providing you with an outline of Dutch corporate income taxation, the chapter pays attention to the impact of BEPS on the Dutch corporate income tax landscape.

Team

Related news

17.05.2019 NL law
Stibbe wins Netherlands Tax Firm of the Year Award for the third time

Inside Stibbe - During the annual European Tax Awards organised by the International Tax Review, Stibbe was once again recognised with the ‘Netherlands Tax Firm of the Year Award’. This completes a hat-trick of Stibbe wins in this category, after also bringing home the Award in 2015 and 2017.

Read more

13.05.2019 LU law
Stibbe reinforces its Luxembourg office with the appointment of three new Counsel

Inside Stibbe - Stibbe reinforces its Luxembourg office with the appointment of Vanessa Schmitt (Corporate & Finance), Olivier dal Farra (Tax), and Frédéric Pilorget (Corporate & Finance) as Counsel. The new appointments have taken effect in April and allow Stibbe to further strengthen its Luxembourg tax and corporate and finance teams to continue to respond to market needs.

Read more

13.05.2019 LU law
Stibbe renforce son cabinet luxembourgeois en nommant trois nouveaux Counsel

Inside Stibbe - Stibbe renforce son cabinet au Luxembourg avec la nomination de Vanessa Schmitt (droit des sociétés et droit financier), Olivier dal Farra (droit fiscal) et Frédéric Pilorget (droit des sociétés et droit financier) en tant que Counsel. Ces nouvelles nominations ont pris effet au mois d’avril et permettent à Stibbe de renforcer davantage son équipe luxembourgeoise en droit fiscal ainsi qu’en droit des sociétés et droit financier afin de continuer à répondre aux besoins du marché.

Read more

25.04.2019 NL law
Tax Alert - Further guidance on revised Dutch tax ruling practice

Short Reads - On 23 April 2019 the Dutch State Secretary of Finance has published a draft decree (the "Decree") and further guidance on the revised Dutch tax ruling practice for tax rulings with an international character ("international tax rulings"), expected to become effective as from 1 July 2019.

Read more

Our website uses functional cookies for the functioning of the website and analytic cookies that enable us to generate aggregated visitor data. We also use other cookies, such as third party tracking cookies - please indicate whether you agree to the use of these other cookies:

Privacy – en cookieverklaring