The Dutch tax advisors at Duijn Tax are always following the latest developments in Dutch and international tax legislation. Our goal is to unburden our clients and take all tax issues out of their hands. This one-pager will give you an idea of the changing landscape of corporate tax and dividend tax. Of course, we are more than willing to elaborate on these matters in a personal email of phone call.
Fiscal Unity
As a consequence of the infamous CJEU Papillon case, since January 1st 2016 it is possible to form a fiscal unity between Dutch companies participating in and held by a third European company or between Dutch companies held by the same third European company.
Transfer Pricing
January 1st 2016, stricter transfer pricing documentation requirements have been introduced in Dutch CIT law. ‘Country by country reporting’ entails that internationally operating concerns with a more than EUR 750mln turnover are required to keep and file ‘country files’. Concerns with more than EUR 50mln turnover are now required to keep a group file and local files. Various kinds of information will become available to tax authorities in all EU countries involved. Fines are due in case of non-compliance. For more information, check our blog on transfer pricing developments.
Dividend Withholding Tax
September 17th 2015, the EU Court of Justice ruled that some non-resident shareholders have been discriminated by Dutch dividend withholding tax legislation. Foreign tax residents having paid dividend withholding tax in The Netherlands might be entitled to a refund in 2016.To prevent dividend tax claims on foreign profits, a step-up will be created. This means that in case of a legal merger between a Dutch and foreign company the paid-up capital will be set at the real economic value of the capital that has been transferred to the Dutch entity. This is a good time for re-domiciliation, as The Netherlands will not withhold tax on dividends attributable to profits made before the date of immigration.
Cooperatives
Substance requirements for cooperatives get stricter in 2016. If a profit distribution is deemed to be a tax withholding tax evading construction, cooperatives are held to withhold dividend tax. Please get in touch with us if this concerns you. Hybrid FinancingIn 2016, some dividend/interest payments from foreign participations are no longer tax exempt through the Dutch participation exemption. This is the case if the payments are deductible costs in the country of origin. In other words: hybrid financing became even more complicated. Let a tax consultant check if your existing arrangements are still participation exemption-proof.
Innovation Box
The 5% CIT rate for research and development (‘innovation box’) is in a transitional period: the innovation facility will be stricter, especially for big companies and companies that do not want to file patents. Rulings concluded before July 2016 will be valid until 2021, so if you still want to benefit from this generous facility, do not postpone your application.