Recent amendments Dutch substance requirements
In our November 2017 Blog (#9) we have discussed the impact of the legislative amendments effective from 1 January 2018. The new law introduces a dividend withholding tax (“WHT”) obligation for holding cooperatives. Under the old legislation, such cooperatives, commonly used in international tax structures, were not subject to dividend WHT, except for certain “abusive” situation. The new legislation aims to eliminate the difference between holding cooperatives and public (NV’s) and limited (BV’s) liability companies by imposing the withholding obligation on such cooperatives and to broaden the general exemption from the withholding obligation for public and limited liability companies.
Deister Holding and Juhler Holding – impact on dividends from Germany
On 20 December 2017, the CJE gave its decision in the joined cases (Case C-504/16, C-613/16) Deister Holding and Juhler Holding concerning the compatibility of the Germany “look through approach” in case of insufficient substance as clarified in Sec. 50d para. 3 German Income Tax Act, with the Parent-Subsidiary Directive (“PSD”) and freedom of establishment. This case is interesting for most Netherlands groups operating in Germany that have received dividends from Germany, which in most cases start with questionnaires about the relevant Netherlands substance at the level of the company receiving the German dividend.
Changes to US tax code will affect all companies doing business in the US
On 22 December 2017, the Tax Cuts and Jobs Act was signed into law by President Trump. It will provide the most comprehensive overhaul of the US tax code in more than 30 years. The reformed US tax system will affect group companies doing business in the US. The most obvious areas that will be affected include tax accounting of US corporations and transfer pricing in relation to US companies/activities.
Dutch legislative amendments per 1 January 2018 aim to strengthen tax climate whilst tackling tax avoidance
The past few months have provided a clear view on what we can expect from the Netherlands in terms of its approach on tax. The old government announced formal legislative proposals on Dutch Budget Day that have effect from 1 January 2018. A few weeks later, nearly seven months after the elections in March 2017, a newly formed government released its coalition agreement which contained some interesting fiscal measures. These tax measures are aimed to take effect from 1 January 2019, subject to the parliamentary process. In this blog we will start with discussing the impact of the legislative amendments effective on 1 January 2018, which have been adopted by the upper house of the Dutch parliament on 19 December 2017.
Italian Supreme Court issues guidance on beneficial ownership conditions for pure holding companies
Prévost, Velcro and Cadbury Schweppes are being perceived as landmark cases in the context of beneficial ownership. A recent decision by the Italian Supreme Court, in which it clarifies that beneficial ownership conditions for holding companies should not be tested based on significant organizational presence, has the potential to be added to this list of “beneficial ownership landmark cases”. The Italian Supreme Court corrects a misinterpretation of the concepts of beneficial ownership and place of effective management, taken into account the nature of the activities carried out by a pure holding company. Subsequently the Italian Supreme Court emphasizes that the mere lack of operational substance of holding companies (in itself) should not be an indicator of the absence of beneficial ownership.
A wake-up call for companies with commissionaire and similar structures
Following discussion draft titled BEPS Action 7: Additional Guidance on the Attribution of Profits to Permanent Establishments, amendments to the OECD Model Convention (“OECD MTC”) have been announced that will impact the attribution of profits to permanent establishments (“PEs”) with respect to warehouses as fixed place of business. Accordingly, amendments have been announced that will impact the status of dependent agents, including those created through commissionaire and similar arrangements. This is currently clarified in Article 5(5) of the OECD MTC.
Should webshops and MNEs that are using commissionaire and similar strategies worry about their tax position?
Following questions received from clients we have decided to provide some more information regarding the Action 7 anti-BEPS measures in relation to agency and commissionaire structures, auxiliary PEs (for instance warehousing) and limited risk distributors.
Dell case: Why do we need the BEPS project?
Recently the Spanish Supreme Court made a landmark decision on the existence of Permanent Establishments (“PEs) in foreign jurisdictions. This decision, if used by tax administrations in other countries, may be far-reaching and may affect many businesses engaged in cross-border activities. Interestingly it is not the proposed Action 7 BEPS measures that should concern businesses. Instead, the broad approach to the interpretation of PEs should be their main concern as this potentially is a source of uncertainty. Even before the Action 7 BEPS measures are implemented, companies may have a PE abroad. The decision of the Spanish Supreme Court in the Dell case illustrates that tax authorities may apply a broad interpretation in this respect.
Netherlands grows as preferred holding jurisdiction for hosting Indian investments
In recent years both Mauritius and Singapore were the leading jurisdictions for hosting investments into India. According to estimates, more than 30% of all investments into India have been structured via Mauritius or Singapore. Following the amendments to the India – Mauritius Double Taxation Avoidance Agreement (“DTAA”), the interaction thereof with the India – Singapore DTAA, the amendments to the India -Cyprus DTAA, and the impact of the Multilateral Instrument (“MLI”) on treaties, multinational enterprises (“MNEs”) may consider exploring other jurisdictions such as the Netherlands for hosting investments into India.
