NL Tax Alert: New Hybrids Decree + withdrawal of March 1997 Decree

Today’s decree deals with the situation of a disregarded Dutch BV which pays dividends, interest or royalties to a disregarded LLC held by a US Inc. Provided that the underlying income out of which the dividend, interest or royalties are paid, is picked up in US Inc’s tax return, the US Inc is recognized as a recipient for the Dutch withholding taxes and tax treaty (article 24-4).

The March 1997 Decree is withdrawn. This decree allowed treaty access where a Dutch entity is held by a hybrid entity, if the hybrid entity is held by a qualifying entity that picks up its income. The situation is nowadays covered in many tax treaties by way of a hybrid article. However, certain structures under older tax treaties without a match on the MLI hybrids clause still relied on the March 1997 Decree (especially). These structures (e.g. LP/LLP-BV structures) require review.

Source: officielebekendmakingen.nl

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