Anti-Tax Avoidance Directive
In line with other EU Member States, the previous Dutch government published its proposed implementation of the EU Anti-Tax Avoidance Directive (“ATAD”) for public consultation. The final proposal is expected to be published in the next few months. It is likely that implementation of the ATAD will affect interest deduction limitation rules. In this respect we expect that the Netherlands will implement similar interest limitation rules as in Germany: the interest expenses that exceed the interest income (net interest expenses) are generally only tax deductible up to 30% of the current year’s taxable EBITDA. It is uncertain to what extent the Netherlands will implement controlled foreign companies / “CFC” legislation.
Multilateral Instrument
More than 70 countries, including the Netherlands, signed a multilateral instrument (“MLI”) in an effort to close the gaps in existing international tax rules by transposing results from the Base Erosion and Profit Shifting (“BEPS”) project into bilateral tax treaties worldwide. The MLI implements among others (i) minimum standards to counter treaty abuse, (ii) a new definition of permanent establishments (see also blog 6 on the Dell case) and (iii) mandatory binding arbitrage rules to improve dispute resolution mechanisms.
