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Corporate income tax reductions announced in 2017 Dutch tax plan
On 20 September 2016, the Dutch government presented the Tax Plan 2017. Taxand Netherlands lists the key changes which are expected to be introduced for corporate tax, dividend tax, wage tax and value added tax.
1. CORPORATE INCOME TAX
1.1. Dutch corporate income tax rate
Currently, the Dutch corporate income tax rate is 20% for profits up to EUR 200,000 and 25% for the excess. It is proposed to gradually increase the lower bracket with the following steps: the reduced tax rate will apply for profits up to EUR 250,000 (2018), EUR 300,000 (2020) and EUR 350,000 (2021), respectively. The reduced corporate tax rate is part of the package to improve the Dutch investment climate.
1.2. Changes to interest deduction limitation rules
In the Dutch corporate tax framework, several interest deduction limitation rules are embedded. For two of these rules, amendments have been proposed. We will discuss the key aspects of these changes below.
We do note that the Dutch interest deduction limitation rules (including the currently proposed changes) may also be affected by the proposed earnings stripping rules as proposed in the BEPS Action Plan. It is currently expected that the BEPS rules will be introduced as per 2018.
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Although these changes are very welcome, there are certainly some challenges to manage. In the event of debt transfer, for example, the owner of the debt may become legally liable to remit VAT to the Dutch tax authorities even if the customer has paid his dues on account of the initial supplier in line with the invoices that were issued.