On 23 February 2018 the Dutch government published its policy on tax evasion/avoidance for the coming years. This policy is intended to secure that Dutch companies are (over time) no longer used as conduit companies for tax planning purposes if insufficient substance is present at the Dutch company. The new policy also addresses the implementation of the EU Anti-Tax Avoidance Directives (ATAD) in more detail. Taxand Netherlands presents an overview of the policy.
The specific new legislative rules included in the policy will need to be approved by Dutch Parliament in the next couple of years and are therefore subject to discussion and potential changes.
Previously the current government outlined the intention to further enhance the Dutch investment climate by lowering the corporate tax rate to 21% and by abolishing dividend withholding tax. The focus of the government is to attract investments in the Netherlands where actual substance is present or will be created in the Netherlands. The government intends to discourage the use of so-called “letterbox” companies for conduit or treaty shopping purposes. An example is the current rules for dividend withholding tax which allow for a domestic full exemption of dividend withholding tax but only if the structure is not qualified as abusive.
Discover more: New Dutch policy on tax evasion and avoidance published
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Through this policy the Dutch government wants to discourage the use of so-called letterbox companies in the Netherlands. The actual impact of a number of the proposed new rules will depend heavily on whether companies in low taxed or EU blacklisted country are used in a group structure. Dutch holding as well as financing and licensing companies which do not meet the increased substance requirements may face exchange of information with other countries and can no longer obtain a tax ruling.
