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Please find below our latest blogs. This section provides an in depth analyses of recent tax developments. All of these blogs can also be downloaded as PDF-documents.

Kuwait – South African Protocol affects the lower WHT on Dividends between South Africa and the Netherlands

 17 Jun. '21

The following questions have been raised after the recent signing of the KU – SA Protocol, due to the interplay of the Protocol with the Most Favoured Nation (“MFN”) clause in the NL – SA DTAA: What are the effects of the KU – SA Protocol on dividend distributions made between Netherlands subsidiaries and South Africa parent companies? And what does this mean for companies qualifying for a dividend WHT exemption under the NL – SA DTAA? Are South African subsidiaries of Netherlands parent companies (still) entitled to a full elimination of dividend WHT under the NL – SA DTAA? What are the current and future anti-avoidance considerations for claiming 0% WHT on dividends? Can South African or Netherlands companies claim a refund of any dividend WHT paid to Netherlands/South African parent companies and/or what is the statutory time limit? This blog will outline the recent developments surrounding the dividend WHT exemption and address these key questions in relation thereto.

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Delhi High Court confirms 5% dividend WHT rate under India-Netherlands DTAA

 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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Russia - Netherlands DTAA terminated by January 1 2022, will it be replaced?

 28 May. '21

Further to our blog on January 19, 2021, the Russian government approved a proposal for the termination of the Netherlands - Russia DTAA (1996) on 9 April 2021. On 26 May 2021, the President of Russia signed Law No. 139-FZ, ratifying the denunciation of the Netherlands - Russia Income and Capital Tax Treaty (1996). The termination may take effect on 1 January 2022 (however, negotiations may influence this). It is expected that negotiations will continue, however, unclear whether there will be a new amended treaty will be put in place by 1 January 2022.

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DAC6 and the use of safe harbours in non-EU jurisdictions

 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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Participation exemption regimes could cost WHT reliefs under EU Parent-Subsidiary Directive and DTAAs

 08 Jan. '21

Following some recent Italian Supreme Court rulings, uncertainty remains as to the position of the Italian Revenue Authority on the Withholding Tax Exemption under the EU Parent-Subsidiary Directive and the bilateral tax treaties concluded between Italy and other EU Member States. This blog considers (i) these developments, (ii) the influence of EU case laws on this matter, (iii) the cross-border relief measures and (iv) the impact on holding companies that may (potentially) be exposed to (significant) dividend withholding tax leakage.

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Cash pooling during and in the aftermath of the Covid-19 pandemic

 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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Cash pooling arrangements: a reflection on selected court cases

 17 Nov. '20

Cash pooling is a cash-management tool used by Multinational Enterprises (MNEs) to efficiently manage the short-term liquidity requirements of the various entities involved in the enterprise. This intra-group financing tool reduces the reliance of MNEs on third-party financing, thereby reducing banking costs and reducing financing needs by offsetting debit account with credit account. Centralizing the control and management of the shared cash pool to a single entity within the multinational group additionally allows all the cash pool participants to benefit from an optimization of the shared resources, better risk management and a better position towards third-party banks or financers.

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Dutch (Corporate Income) Tax Plan 2021

 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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Effective WHT rate on dividends reduced to 5% under India-Netherlands DTAA after India abolishes DDT

 25 May. '20

One of the key features of India’s Union Budget for 2020, presented by the Finance Minister on 1 February 2020, was the elimination of the intensely unpopular Dividend Distribution Tax (“DDT”) with effect 1 April 2020 and a return to the "shareholder based taxation system" for dividends. The maneuverer is part of the policy package intended to position India as an attractive investment destination for foreign investors.

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Brazilian Court rules on interpretation of substantial economic activity of Dutch holding companies for application of thin-capitalization rules

 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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Interrelating treaties lower the WHT on Dividends between South Africa and the Netherlands

 03 Dec. '19

Tax courts in the Netherlands and South Africa have confirmed that the effective withholding tax (“WHT”) rate on dividends under the Netherlands – South Africa Double Tax Avoidance Agreement (“NL – SA DTAA”) is 0%, should a company hold at least 10% of the shares in the company paying the dividend. This rate remains conditional upon two factors: the exemption from dividend WHT in the South Africa – Kuwait DTAA (“KU – SA DTAA”) remaining in force and the most favoured nation clause in the South Africa – Sweden DTAA (“SW – SA DTAA”) remaining unchanged. The decisions of the Tax Courts, which apply to dividends flowing between South Africa and the Netherlands, has interesting implications for multinational companies looking to invest in the Netherlands or in South Africa.

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Google Ireland not taxable in France via its French subsidiary

 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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CJEU cases on beneficial ownership and treaty abuse – case overview

 24 May. '19

On February 26, 2019, the Court of Justice of the European Union (CJEU) issued its landmark judgements in six cases which deal with the application of the EC Parent-Subsidiary Directive and the EC Interest and Royalty Directive. The majority (5 out of 6) of the cases involved Luxembourg or Cyprus holding and financing companies. Effectively the Luxembourg and Cyprus holding companies formed part of a pooled investment group collecting funds from generally non-EU investors.

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The Dutch implementation of ATAD1

 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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Latest ruling in US highlights importance of managing tax compliance in digital economy

 15 Oct. '18

On 21 June 2018, the US Supreme Court issued its highly anticipated decision in South Dakota v. Wayfair. In the context of the current debate on the taxation of the digital economy and observing the March, 2018 EC proposals this decision may have a significant impact. The case was even called the “tax case of the millennium” and will basically change not only the US sales tax landscape but will also have far-reaching implications for non-US businesses supplying goods and services to the U.S.

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BREXIT – what actions are required for companies doing business with and within the UK

 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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The attribution of Location Savings in a transfer pricing context

 20 Mar. '18

When multinational companies (“MNEs”) choose a location to set up activities, they have to consider many factors, including among others local market circumstances, level of production expenditure, available infrastructure and the political/tax climate. We continue to see a trend of relocations of low-risk, manufacturing activities to China, Brazil or India (i.e. the more prominent emerging markets, where labour / manufacturing costs are generally lower than in the Netherlands) as well as Germany, observing generally lower investments expenditure compared to The Netherlands.

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Summary of international and Dutch tax developments in 2017

 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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Recent amendments Dutch substance requirements

 18 Feb. '18

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.

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Deister Holding and Juhler Holding - impact on dividends from Germany

 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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Changes to US tax code will affect all companies doing business in the US

 31 Jan. '18

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.

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Dutch legislative amendments per 1 January 2018 aim to strengthen tax climate whilst tackling tax avoidance

 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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Italian Supreme Court issues guidance on beneficial ownership conditions for pure holding companies

 31 Mar. '17

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.

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A wake-up call for companies with commissionaire and similar structures

 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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Should webshops and MNEs that are using commissionaire and similar strategies worry about their tax position?

 31 Jan. '17

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.

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Dell case: Why do we need the BEPS project?

 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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Netherlands grows as preferred holding jurisdiction for hosting Indian investments

 30 Sep. '16

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.

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