Preparing your global entities in the Netherlands for 2021
2020 has proven to be a challenging and volatile year for businesses, the economy and social environments. As the year approaches an end and your company begins planning for 2021, it is imperative not to neglect the cost expenditure and good standing of your international entities in the Netherlands and other jurisdictions. Many international operating companies seek methods to restructure their international subsidiaries and holding companies and implement cost efficiencies to reduce expenditure for 2021 and beyond.
At AMS Financial Group we are at the forefront in assisting international entity reduction and cost efficiency programs for multinational corporations with subsidiaries in the Netherlands and other jurisdictions and we are happy to provide you relevant information that can result in substantial cost savings (as much as 30% ) related to the administration of your subsidiaries in these jurisdictions.
Below we have also made a summary of recent or expected changes in Dutch tax laws that might affect your international entity structure in the Netherlands.
|Corporate income tax rates||Currently, Dutch corporate income tax is levied at a rate of 16.5% on the first EUR 200,000 of taxable profits and at 25% on any additional profits. For 2021 those rates will be 15% on the first EUR 245,000 of taxable profits and 25% on any additional profits. As of 2022 the rates will be 15% on the first EUR 395,000 of taxable profits and 25% on any additional profits.|
|Substance requirements for affiliated payments||
As of January 1, 2021, Dutch corporate taxpayers that (1) receive payments such as interest and royalty from 1/3 affiliated entities, and (2) make similar payments to affiliated entities, and (3) benefit from a more favorable foreign tax treatment of such payments than in case such payments would not have been routed through the Dutch taxpayer, should meet the Dutch relevant substance requirements. These requirements include (i.e. on top of the standard Dutch minimum substance requirements) having office space for at least 24 months and a payroll of at least EUR 100k, both in the Netherlands. In case these requirements are not continuously met, the Dutch tax authorities would exchange information with the tax authorities of the jurisdictions from which the Dutch taxpayer received the relevant payments.
|Disclosure rule for tax optimized structures||
As of January 1, 2021, taxpayers in the European Union as well as their intermediaries such as tax advisors or local directors/managers should disclose cross-border structures and/or transactions which basically contain a tax benefit within 30 days after the first implementation step. Anything implemented in this respect between June 25, 2018, and July 1, 2020, should be reported by February 28, 2021.
As per September 27, 2020, new entities that are included in the Dutch trade register should disclose details of their Ultimate Beneficial Owners (UBO’s) generally with an interest of more than 25%. The same applies for entities already included in the trade register, albeit that the deadline for this is March 27, 2022.
|Withholding tax on intra-group payments||
As of January 1, 2021, interests and royalties due by a Dutch entity – on an at arm’s length accrual basis – to recipients (1a) residing in low tax jurisdictions (i.e. profit tax rate below 9%), OR (1b) using an abusive structure, and (2) having a controlling stake in the Dutch entity, would be subject to withholding tax at the rate of 25%. At the end of this briefing follows the current Dutch list of low-taxed and/or non-cooperative countries.
|Tax on FX gains on base erosion debts||
As of January 1, 2021, foreign exchange gains on debts that fall under the scope of the existing Dutch anti-base erosion provision would no longer be tax deductible for Dutch corporate income tax purposes. Currently, the Dutch anti-base erosion provision restricts the tax deductibility of costs of certain tainted debts such interest expenses and FX losses and simultaneously based on case law exempts any FX gains in this respect. This exemption would be abolished.
|List of low-taxed or non-cooperative countries||
Below follow the jurisdictions that have been listed by the Netherlands as low-taxed (i.e. profit tax at a statutory rate below 9%) and/or non-cooperative countries. This combined Dutch list includes more jurisdictions than the EU ‘blacklist’. American Samoa, Anguilla, Bahama’s, Bahrein, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Fiji, Guam, Guernsey, Isle of Man, Jersey, Samoa, Trinidad and Tobago, Turkish- and Caicos Islands, Turkmenistan, Vanuatu, the United Arabic Emirates and the US Virgin Islands.
Please do let us know if you need additional information as we are at your service for any assistance you might need or seek.