Short Reads

ECJ ruling on Dutch CIT Fiscal Unity prompts legislative action

ECJ ruling on Dutch CIT Fiscal Unity prompts legislative action

ECJ ruling on Dutch CIT Fiscal Unity prompts legislative action

22.02.2018 NL law

In this Tax Alert we will address the anxiously awaited ruling of the European Court of Justice ("ECJ") on the joined cases C-398/16 and C-399/16. This judgement deals with the question whether EU law obliges the Netherlands to let taxpayers cherry pick benefits from the fiscal unity regime. We also mention the announcement of the Dutch Ministry of Finance to improve the rules for obtaining tax rulings in the Netherlands.

1. Joined cases C-398/16 and C-399/16

Today the ECJ has published its ruling on the joined cases C-398/16 and C-399/16. In both cases the key question is to what extent the current Dutch corporate income tax ("CIT") fiscal unity regime is in breach of EU law (in particular the freedom of establishment). The ECJ decided that the effective non-application of the Dutch anti-base erosion rules in domestic CIT fiscal unity situations is in breach with the freedom of establishment (case C-398/16). The ECJ also ruled that the non-deductibility of foreign exchange results as part of the Dutch participation exemption regime is not in breach with the freedom of establishment (case C-399/16). The Dutch Ministry of Finance confirmed that in line with their letter of 25 October last, the Dutch CIT fiscal unity regime will be amended with retroactive effect to 25 October 2017, 11.00 hours. A legislative proposal has been announced for Q2 2018. The envisaged amendments may likely include limiting interest deduction also in domestic situations (including the anti-base erosion rules that were addressed in case C-398/16). This could have substantial negative effects for existing fiscal unities relying on interest deduction.

In light of the ECJ’s ruling it may for instance be beneficial to file an appeal against CIT assessments for pre- 25 October 2017 periods in which CIT fiscal unity benefits have not been granted or claimed for cross border situations. If the appeal is granted certain interest expenses for which deduction was denied may become fully deductible after all.

2. Dutch tax ruling practice to be centralized

In a letter of 18 February 2018 the Dutch State Secretary of Finance has announced that procedures for quality control in the Dutch ruling practice will be further improved. Rulings that involve international aspects are to be coordinated centrally (expectedly by the existing APA/ATR-team in Rotterdam). Local tax inspectors should then no longer be competent to issue rulings with international aspects without consulting with the central team. A committee of experts will be appointed to do further analysis as to the scope and content of the exact changes. The changes are expected to enter into force as per 1 January 2019. The new policy follows from an in-depth investigation by the Dutch Revenue into over 4,400 existing rulings to see whether these were in line with published guidelines. The new ruling policy is to strengthen the Dutch ruling practice and is part of the international trend to accommodate real economic activities and discourage substanceless structures.

Team

Related news

08.11.2019 BE law
Interview with Wouter Ghijsels on Next Gen lawyers

Articles - Stibbe’s managing partner Wouter Ghijsels shares his insights on the next generation of lawyers and the future of the legal profession at the occasion of the Leaders Meeting Paris where Belgian business leaders, politicians and inspiring people from the cultural and academic world will discuss this year's central theme "The Next Gen".

Read more

05.11.2019 LU law
Stibbe renforce son cabinet au Luxembourg avec l’arrivée de Johan Léonard en qualité d’associé au sein du département de droit fiscal

Inside Stibbe - Luxembourg, 5 novembre 2019 – Stibbe renforce son cabinet luxembourgeois avec le recrutement latéral de Johan Léonard, associé au sein de la pratique de droit fiscal. Son arrivée permettra au cabinet d’augmenter son offre fiscale au Luxembourg afin de mieux répondre à l’évolution des besoins du marché. Johan a rejoint Stibbe le 4 novembre 2019.

Read more

27.09.2019 NL law
Stibbe is attending the IBA's annual conference in Seoul

Conference - The annual conference of the International Bar Association (IBA) is currently taking place in Seoul. There are fourteen partners from Stibbe attending the event. Several of them have speaking slots on a wide range of legal topics and will take part in various panel discussions.

Read more

27.09.2019 NL law
Tax Alert: EU General Court rules on two cases regarding State aid in relation to tax rulings

Short Reads - On 24 September 2019, the General Court of the European Union ("Court") ruled on the joined cases T-760/15 and T-636/16 (Starbucks) and the joined cases T-755/15 and T-759/15 (Fiat Chrysler). Both cases are complex and contain novel considerations. In this Tax Alert we provide you with a first summary of both cases and some preliminary observations.

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