04 Mar. '24

This blog is the first of our two-part series calling attention to some easily avoidable perils we encounter in Transfer Pricing (“TP”) documentation. These item are also the “red flags” that stand out for tax authorities during TP audits. Though there is no such thing as a “bullet-proof TP strategy”, avoiding these red flags can alleviate some pressure from the audit procedure. In general, being prepared with the requisite documentation and engaging proactively with the tax authorities makes the process less stressful. In our view, tax audits should be viewed as an opportunity to be transparent and forthcoming with the tax authorities. To help companies prepare for tax audits and questions from the tax authorities, we are sharing our experience with tax audits, specifically pointing out some pitfalls to watch out for while developing TP policies and compiling TP documentation.

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15 Feb. '24

This blog is related to our previous blogs about the effective dividend withholding tax (“WHT”) rate as per the provisions of the Double Taxation Avoidance Agreement (“DTAA”) between the Netherlands and India. In this blog, we cover the latest update on this topic – an Indian Supreme Court (“SC”) ruling regarding the interpretation of Most Favoured Nation (“MFN”) clauses in Indian tax treaties with various OECD member countries.

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31 May. '23

In this blog, we make 10 observations on how the European Commission's Third Anti Tax Avoidance Directive (“ATAD3”) will affect businesses in Europe once implemented. The amended draft has been approved by the European Parliament and published by the European Commission (“EC”) on 17 January 2023. The Directive is set to be implemented by the European Union (“EU”) Member States on 1 January 2024. However, some of the provisions proposed in the Directive have a two-year look back period (i.e., covering 2022 & 2023).

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04 May. '23

In this blog, we highlight the urgency for E.U. companies to examine whether they meet certain “minimum substance requirements” in preparation for ATAD3 – the proposed E.U. Directive aimed at preventing the misuse of “shell entities” in the E.U. Once implemented by the E.U. Member States, the proposed Directive will require E.U. companies that do not meet the specified substance requirements to prove that they perform actual economic activity. The proposed Directive that is set to take effect on 1 January 2024 will apply to all E.U. companies (as in, without any monetary threshold). Consequences proposed under ATAD3 include the denial of TRCs, which will impact the dealings of the affected companies within the E.U. and in third-countries. Since some of the substance requirements proposed under ATAD3 have a two-year “look back” provision (i.e., potentially covering 2022 and 2023), it is prudent for E.U. companies to start assessing how they measure up against these requirements ASAP.

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21 Nov. '22

On 8 May 2022, the Tel Aviv-Yafo District Court (“the Court”) decided on a transfer pricing dispute regarding the concept of post-acquisition business restructurings. In 2010, the Roche Group acquired the full share capital of Medingo. Six months post the acquisition, the parties entered into several agreements, changing Medingo’s business model from that of a full-fledged entrepreneur to a low-risk manufacturing, sales and development site. Three years later, Medingo’s (pre-acquisition) IP was sold to Roche and its activities were ceased. The Court had to decide whether the (pre-acquisition) IP was transferred/sold to Roche at the time of acquisition or three years later, when Medingo’s activities were ceased. This blog comprises of an overview of the case.

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05 May. '22

This blog is an update to our previous blogs titled “Reduction of Dividend WHT (to 5%) under India-Netherlands DTAA as India abolishes DDT (from 1 April 2020)” and “Delhi High Court confirms 5% dividend WHT rate under India-Netherlands DTAA”. These blogs affirm that the effective WHT rate on dividends distributed by Indian subsidiaries to their parent companies in the Netherlands could be reduced from 15% (as stipulated in the India-Netherlands DTAA) to 5% (by operation of the MFN-clause in the DTAA) based on a Decree of the Dutch Ministry of Finance and a recent Delhi High Court ruling . On 3 February 2022, the Indian Central Board of Direct Taxes (“CBDT”) issued a Circular stating their interpretation on the MFN clauses in India’s DTAAs with European/OECD member countries, including the Netherlands. The Circular states that the effective WHT rate on dividends under the India-Netherlands DTAA should be 10% (and not 5% as stated in the Dutch Decree and the Delhi High Court ruling). In this blog, we summarize the main contentions of the CBDT with regard to the effective rate of dividend WHT under the India-Netherlands DTAA and also touch upon some considerations for Dutch companies receiving dividends from their Indian subsidiaries.

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07 Jun. '21

This article is an update to our previous article, titled: “Reduction of Dividend WHT (to 5%) under India-Netherlands DTAA as India abolishes DDT (from 1 April 2020)”. With the abolition of the Indian Dividend Distribution Tax (“DDT”) and a return to the “shareholder based taxation system” for dividends paid by Indian companies with effect of 1 April 2020, the withholding tax (“WHT”) rates prescribed in respect of dividends in the Indian Double Taxation Avoidance Agreements (“DTAAs”) have become a popular topic for discussion.

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15 Jan. '21

MNEs making use of safe harbour taxation rules, in the E.U. as well as in third-countries, may oblige the E.U.-based taxpayers within the MNEs to report these safe harbour arrangements to tax authorities in the E.U. under the E.U. Directive on Mandatory Disclosure Rules (“DAC6”). In this blog, we take a look at the safe harbour provisions of non-E.U. jurisdictions (specifically, India and Brazil) and when making use of these safe harbour provisions may give rise to a reporting obligation under Hallmark E.1 of DAC6. The blog also sheds some light on transfer pricing methods for pricing low value-adding intragroup services (“LVAS”) as defined in Chapter VII of the OECD TP Guidelines.

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17 Nov. '20

As businesses across the world struggle to deal with the economic impact of the Covid-19 pandemic, liquidity and freeing up much needed cash resources has become the main concern for many businesses.

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28 Sep. '20

On 15 September 2020 (Prinsjesdag), the Dutch government published the Tax Plan for 2021. Aside from proposals to amend the tax regime for 2021, investigations and consultations regarding further changes have been announced. The legislative proposals will be reviewed, first, by the Lower House of Parliament and then, by the Senate. If the proposals are accepted by both Houses of Parliament, the proposals will enter into effect on 1 January 2021.

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26 Feb. '20

On December 31, 2019, the Brazilian Administrative Council of Tax Appeals’ published its decision involving the substance of “economic activity” of a Dutch holding company, lending to its related entity in Brazil. The case involved the application of the Brazilian thin-capitalization rules. The Brazilian court ruled that the lender, a Netherlands holding company, had insufficient economic activities. Hence, the thin-capitalization rules applied and part of the interest was not-deductible in Brazil. Consequentially, it resulted in (a partial) double taxation for the Group.

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12 Jun. '19

On 25 April 2019 the Paris Administrative Court of Appeal confirmed the decision ruled on 12 July 2017 by the first-instance Court that Google Ireland Limited did not have a permanent establishment in France between 2005 and 2010 and was therefore not taxable in France. The key question before the first-instance Court in the original case was if Google Ireland Limited had a permanent establishment (PE) in France. The French tax administration (FTA) argued that the online advertisement services that Google Ireland Limited provided to customers in France through a French Google subsidiary (Google France SARL) constituted a PE in France, and was therefore taxable. The Paris Administrative Court of Appeal found that the establishment in France did not have the capability to carry out the advertising activities in France on its own behalf and declined the statement of the FTA.

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15 Mar. '19

From January 1, 2019, the first EU Anti-Tax Avoidance Directive (2016/1164) (hereafter: ATAD1) is implemented by all EU Member States. A number of its provisions impact the field of (inter)national taxation. In the Netherlands we have seen the introduction of an earnings stripping measure and CFC legislation. In addition a number of provisions limiting the deduction of interest expenses have been abolished. This contribution intends to provide a summary. To serve its’ purpose we have also itemized a number of observations obtained in day-to-day to practice in relation to the earnings stripping provisions and its’ relation to the Dutch fiscal unity, ECJ legislation and transfer pricing.

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08 May. '18

More than a year has passed since the UK formally opted to leave the EU. We published our first blog on Brexit shortly after the UK formally triggered Article 50 of the EU treaty (withdraw from the Union). At that time, we discussed the likely scenario of a transitional period after the time-frame to conclude a final withdrawal agreement with the EU within two years. We also discussed the likely tax implications and potential steps that could be taken to mitigate or reduce the tax impact of a Brexit. In this blog, we will assess the latest status in the negotiations between the EU and the UK, and update our views and takeaways.

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28 Feb. '18

2017 was a year in which the international tax climate continued to change rapidly: the OECD persisted in its efforts to tackle tax avoidance, the European Commission opened state aid investigations into the tax treatment of Apple in Ireland and IKEA in the Netherlands, and some key jurisdictions introduced or proposed significant tax legislation, thereby affecting all multinational enterprises having arrangements in these jurisdictions. It was also a year of major political change, with elections in Italy, Netherlands, the UK, Germany and France, and a new president in the USA. In blog 9, we have discussed the implications of the new legislation introduced by the Dutch government as of 1 January 2018. In addition, the new government announced some of its tax plans for the coming years, which means that we expect even more changes for the Dutch budget in autumn. In this blog, we will look back at tax year 2017 and review the changes that have an impact on businesses / multinational companies in the Netherlands. It should be noted that we have focused on the relevant items that on a day-to-day base affect our clients.

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04 Feb. '18

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.

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30 Nov. '17

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.

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31 Jan. '17

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.

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30 Nov. '16

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.

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