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Corporate Tax Proposals Impact Taxpayers


On 17 November 2011, an amended version of the 2012 changes to Dutch tax legislation has been approved by the Lower House of the Dutch Parliament. The Bill needs to be approved by the Upper House of the Dutch Parliament. No further amendments are expected and, in principle, the legislation will enter into force as of 1 January 2012. Taxand Netherlands summarises the most important recent changes to the proposals for corporate taxpayers.

Restrictions on interest deductions
Further restrictions are proposed on interest deductions in leveraged acquisition structures involving Dutch target companies. In addition to the existing Dutch anti-base erosion and thin-cap regimes, the leveraged acquisition holding regime will also apply to third-party acquisition debts.

Based on this new regime, interest may not be deducted if:

  1. the annual interest expenses (on acquisition debt) exceed the amount of the own profits of the holding company on stand-alone basis
  2. the interest is related to excessive acquisition debt ("excessive interest")
  3. the excessive interest exceeds an amount of EUR 1,000,000

The definition of excessive acquisition debt has been changed in the amended proposal. Excessive acquisition debt is, in principle, defined as the amount of the acquisition debt which exceeds 60% of the acquisition price. Subsequently, for a seven year period, the maximum debt percentage of 60% annually decreases by 5%, until a 25% residual debt remains. As a result the taxpayer is encouraged to gradually repay the acquisition debt.

It was expected that a grandfathering rule would apply to acquisitions prior to 31 December 2011. At the last moment this was changed to 15 November 2011. Furthermore, it has been announced that potential new legislation with respect to interest deduction restrictions in relation to foreign shareholdings will be published in the course of 2012.

Taxand's Take

The amended 30% ruling regime for expats under the 30% ruling regime, extra-territorial employees can qualify for a tax-free reimbursement of 30% of their wages. As per 1 January 2012 the rules to qualify for this regime will change. The 30% ruling will as of 1 January 2012 be issued for an 8 year period (now 10 years). Furthermore the salary minimum in order to qualify for specific expertise has been reduced from EUR 50,000 to EUR 35,000.

Your Taxand contacts for further queries are:
Marc Sanders
T. + 31 20 757 09 05

Chris van Wijngaarden
T. +31 20 757 09 40

Taxand's Take Author