The Dutch Supreme Court issued a ruling on the Dutch tax treatment of a German Sondervermögen with a single investor. The case is relevant for funds that claim refunds of Dutch dividend withholding tax. The EU law questions on the matter remain unanswered pending a final decision by the ECJ in case C-156/17 (Köln Aktienfonds).
For the first time, the Dutch Supreme Court applied the Danish beneficial ownership judgements (ECJ C-116/16 and C-117/16) in a Dutch CIT case. The case involves a low substance, non-conduit holding structure. The Supreme Court acknowledges that the Netherlands must apply the EU tax abuse concept to the Dutch CIT regime applicable to foreign substantial shareholders in 2012. This means that the tax authorities should prove the existence of a tax abusive motive (subjective test), but the taxpayer may provide counter-evidence that the structure is not artificial and devoid of economic reality (objective test). This case underlines the importance of real substance in case a tax benefit is obtained.
An interesting Dutch lower court pilot case was published last Friday regarding Dutch dividend withholding tax reclaims by a German open investment fund (Publikum Sondervermögen). The German fund argued that the reclaim should be granted because of its comparability with a Dutch fiscal investment institution (FBI).
Today, we moved into our new office at Amstel 228. We wish everyone a happy new year - may 2020 be full of tax benefits!
The new Decree on financial and operational lease has been published (effective per 1 January 2020). The Decree confirms that the tax authorities do not accept the IFRS 16 treatment of operational leases for Dutch tax purposes (in line with an earlier announcement). This generates a book-to-tax difference. For Dutch tax purposes, the yearly nominal operational lease expense is taken into account. Therefore, neither the lease asset and payment liability, nor the annual amortization and interest expenses are booked. This has an impact on the tax assets of a company, the earnings stripping rule and transfer pricing calculations.
The Dutch Senate just approved various tax bills, including the 2020 tax plan, anti-hybrid rules (ATAD2), mandatory disclosure rules (DAC6) and withholding tax rules per 2021. The tax plan contains a reduction in the Dutch CIT rate (headline rate dropping to 21.7% per 2021). Regarding DAC6, further guidance on the rules and on the use of the webportal for DAC6 reporting should be published early 2020. The Senate adopted a motion to soften the effects of double taxation resulting from the anti-hybrid rules.
The formal Decree abolishing access to the US-NL tax treaty for reverse hybrid entities (such as certain CVs) per 1 January 2020 has just been published. The Decree is in line with an earlier announcement and clarifies that existing rulings or permits will not be grandfathered. In addition, the March 1997 Decree granting treaty access to hybrid recipients will be reconsidered (potentially resulting in double taxation). This can be seen in the context of a wider reconsideration of Dutch transparency criteria.
A draft decree on increased substance requirements for Dutch financing and licensing companies has been published. New substance requirements include €100k of wage costs and an office in the Netherlands, to be utilized for the financing/licensing function. Not meeting the substance requirements results in information exchange with source countries.
The effective date of the new substance requirements for Dutch financing, licensing and leasing companies will be 1 January 2021.