In this section you will find the latest news on tax subjects we regularly advise on. If you wish to receive additional information on these topics, please feel free to contact us.
17 Dec. '20
Digitalization of the economy has caused quite a conundrum in the world of international taxation. Addressing the tax challenges raised by digitalisation is currently the top priority for the OECD/G20 Inclusive Framework, and has been a key area of focus of the Base Erosion and Profit Shifting (“BEPS”) Project since its inception.
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15 Jun. '20
Our colleagues, Frank Janssen and Yoran Noij, are currently analysing our 2020 benchmarking strategies for determining the arm’s length compensation for service providers, contract manufacturers and limited-risk distributors by applying the TNMM method. These limited-risk companies are commonplace in supply chains and do not usually assume significant economic risks. Generally, benchmark studies indicate that such companies are expected to earn guaranteed profits under arm’s length conditions. However, benchmarking studies based on past data do not reflect the impact of COVID-19.
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18 Feb. '20
On 31 January 2020, the OECD/G20 Inclusive Framework on BEPS (IF) released statement approving the Two-Pillar Approach to Address the Tax Challenges Arising from the Digitalisation of the Economy. The IF members affirmed their commitment to reach a multilateral agreement on a consensus-based solution by the end of 2020 and have therefore agreed upon an ‘Outline of the Architecture of a Unified Approach on Pillar One’ (the Outline) as the basis for negotiations and welcomed the progress made on Pillar Two. The Outline is designed to adapt taxing rights in consideration of new business models and thereby expand the taxing rights of market jurisdictions.
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18 Jun. '19
As a result of the recent CJEU Danish cases, Members of the Lower House of the Dutch Parliament raised questions in regard to the perspective of the Government hereto, and more specifically the position of the Dutch Tax Authorities (DTA).
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03 Jun. '19
On May 15, 2019 the EU Council adopted a revised EU blacklist of non-cooperative jurisdictions for tax purposes. After including ten jurisdictions in March, the EU decided to remove Barbados, Bermuda and Aruba from the list. This decision was based on commitments made by the listed jurisdictions and an assessment of jurisdictions for which no listing decision had been taken yet.
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13 May. '19
Recently the Arbitrage Court of Appeal of Moscow issued a decision (Decision No. А40-66788/18, March 4, 2019) on the Russian requirements for beneficial ownership of dividends for foreign companies. The question concerned was if dividends paid by a Russian company to its parent company, based in Cyprus, qualify for the partial exemption of withholding tax of 5% provided under article 10(2) of the DTAA Cyprus - Russia.
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07 May. '19
On April 23, 2019, the Dutch State Secretary of Finance proposed a new Decree governing the granting of international rulings by the Netherlands. This new Decree is supposed to enter into force on July 1, 2019 and relates to rulings with a cross-border impact; e.g. application of participation exemption to foreign income, the presence of a permanent establishment in the Netherlands, head office/permanent establishment (allocation) rulings, catch-all clauses contained in limitation on benefits provisions in tax treaties, bilateral and multilateral APAs et al.
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02 May. '19
On 17 April 2019, the German Ministry of Finance published a draft bill, dated 12 April 2019, on the fiscal promotion of research activities. The draft bill consists of a research allowance, which will be available upon request for qualifying resident and non-resident taxpayers.
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26 Apr. '19
On February 26, 2019, the Court of Justice of the European Union (CJEU) issued its landmark judgements in six cases (C-115/16, C-118/16, C-119/16 & C-299/16 and C-116/16 & C-117/16) dealing with withholding tax on dividends and interest paid by Danish companies to entities in other Member States. The majority (5 out of 6) of the cases involved holding and financing structures involving non-EU investors that utilized a Luxembourg or Cypriot holding and financing structure to invest in Danish companies, whereby withholding tax savings on dividends and interest materialized.
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06 Mar. '19
The Netherlands has joined the expanding list of signatories that have ratified the Multilateral Instrument (MLI), after the Upper House (Eerste Kamer) of the Dutch Parliament approved the ratification bill on March 5, 2019. If the Netherlands deposits the ratification bill prior to April 1, 2019, the MLI will enter into effect as from January 1, 2020, for both taxes at source and other taxes. This is of course dependent on several factors, such as the question if the other signatory has deposited the Double Tax Avoidance Agreement under the scope of the MLI, and furthermore if (and when) that other signatory has also completed the ratification procedure of the MLI.
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26 Feb. '19
On February 13, 2019 the OECD (Organisation for Economic Co-operation and Development) launched an online consultation on possible solutions to address the tax challenges arising from the digitalisation of the economy. The objective is to provide external stakeholders an opportunity to provide input upfront of the public consultation of the OECD on March 13 & 14, 2019 in Paris, France. As part of the online consultation, the OECD released a detailed consultation document which describes the already existing proposals regarding the tax challenges of the digitalisation of the economy and outlines a number of policy issues and technical aspects.
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20 Dec. '18
Following up on our June 2018 news item ‘This close to disclose?’ where we discussed the EU Directive on Mandatory Disclosure (Directive (EU) 2018/822, DAC6), the Dutch government is currently in the process to implement the Directive into domestic law. Prior to this, the government has launched an internet consultation offering interested parties an opportunity to respond to the legislative bill that implements the Directive into domestic law.
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28 Nov. '18
On 14 November 2018 the European Commission and the UK reached an agreement on the Withdrawal Agreement and on an outline of the political declaration on the future EU-UK relationship. This newsitem lists the main consequences.
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07 Jun. '18
New mandatory disclosure requirements for intermediaries and relevant taxpayers, aimed at boosting transparency to tackle aggressive cross-border tax planning, will enter into force on 25 June 2018. The arrangements described as “reportable” are very wide-ranging and therefore it cannot be assumed that taxpayers which do not want to be associated with “aggressive tax avoidance” do not have arrangements in place that are disclosable.
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09 Apr. '18
This week the Lower House of the Dutch Parliament has acknowledged that these (extended) requirements do not take into account the scale and nature of the (worldwide) activities of enterprises. Hence, the Lower House has resolved a motion requesting the government to take into account the scale and nature of activities in applying the extended substance requirements.
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09 Apr. '18
In our blog of February, 2018 we discussed the recent (December 2017) ECJ decision in Deister Holding and Juhler Holding (Joined Cases C-504/16 and C-613/16). In these cases the ECJ had held that the German “look through approach” in case of insufficient substance as clarified in Sec. 50d para. 3 German Income Tax Act (ITA) was not compatible with the EC Parent-Subsidiary Directive (Sec. 1 para. 2 in conjunction with Sec. 5 para. 1) and EC law (Sec. 49 TFEU). These Joint Cases are interesting for most Netherlands groups operating in Germany that have received dividends from Germany. Typically Netherlands holding companies that administer subsidiaries have difficulty substantiating sufficient substance to comply with Sec. 50d para. 3 ITA. Often these foreign holding companies, as in the case of the Deister Holding and Juhler Holding require by nature limited managerial staff to manage their asset management activities.
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15 Mar. '18
On March 13, 2018 the Council of the European Union reached an agreement to establish certain reporting obligations for intermediaries, such as tax advisers, accountants and lawyers. The draft directive the Council has adopted is relevant for all tax advisers (including in-house tax specialists) who advice on international clients, and deadlines of potential notification requirements should be monitored carefully. The Council also agreed on amendments to the EU blacklist.
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08 Mar. '18
The Finance Court of Cologne (Germany) has taken an interesting approach on transfer pricing methodology. The Tax Court decided that an internal (i.e. third party bank loan) Comparable Uncontrolled Price (“CUP”) is preferred as transfer pricing method on analyzing the arm’s length remuneration on an intercompany loan, even though the loans did not appear to be comparable from the outset.
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19 Feb. '18
On 22 December 2017, the Tax Cuts and Jobs Act was signed into law by President Trump. With it, the Act provides the most comprehensive overhaul of the US tax code in more than 30 years.
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16 Feb. '18
As of 1 January 2018, new legislation eliminates dividend withholding tax on distributions to entities resident in the EU/EEA or in a state with which the Netherlands has concluded a tax treaty that includes a dividend article. The exemption is subject to targeted anti-abuse rules, but should make the Netherlands tax climate more attractive.
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14 Feb. '18
For a number of years, the Netherlands used a minimum list of “substance requirements” to assess whether or not a company could apply for a certificate of residence in the Netherlands. The full list also needed to be satisfied in order to get access to the Dutch tax ruling team. In the Dutch Tax Bill 2018, the list is now further clarified and expanded.
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07 Feb. '18
On 7 February 2018, the German parties CDU, CSU and the SPD formed a coalition agreement. Although there is nothing fundamentally new within the fiscal paragraphs included in the agreement, the agreement does display a broad vision of Germany’s future tax policy, and more importantly, the EU’s future tax policy.
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23 Jan. '18
On 12 December 2017, an appeal decision by Court The Hague was published regarding non-resident taxation of a dividend distribution from a Dutch company to a company migrated to Luxembourg. The company migrated to Luxembourg was held by an individual. Where the lower court decided in favor of the taxpayer, the Court The Hague decided the other way around. The Dutch Tax Authorities actively use this case in relevant discussions.
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12 Dec. '17
Last week we provided a second opinion to an accounting firm in respect of the envisaged transfer of valuable intangibles of one of its clients, a MNE, to a Luxembourg company. The MNE manufactured and distributed products. The value of the products was not determined by the technical features of the products, but rather by the brand name and exposure. The MNE wanted to differentiate itself from its competitors through the development of brand names with great value, by implementing a carefully developed and expensive marketing strategy. The brand names are owned by X BV in The Netherlands. The development, maintenance and execution of a worldwide marketing strategy are the main value drivers of the MNE, performed by 275 employees at X BV’s Netherlands head office. The value of the brand names resulted in a high consumer price for the products. X BV’s head office also provides for central services for the group affiliates (e.g. human resource management, legal, tax). The products are manufactured by affiliates under contract manufacturing arrangements with X BV. They are distributed by affiliates who purchase them from X BV. After having allocated an arm’s length remuneration to the contract manufacturers and distributors the profits derived by X BV are considered to be the remuneration for the intangibles, marketing activities and central services of X BV.
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12 Dec. '17
On 27 December 2016, the Luxembourg administration for direct taxes published a Cicular on group financing activities. The Circular more or less clarifies and/or emphasizes that the effective management of Luxembourg group financing companies should take place in Luxembourg and certain risk requirements need to be satisfied.
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12 Dec. '17
The Netherlands government promotes engagement in research and development (R&D) activities through a preferential corporate income tax regime (i.e. the innovation box) and specific R&D tax incentives granted to employers with regard to salaries paid to employees who carry on qualifying R&D activities and related capital expenditure (i.e. the WBSO). In the last few months we have seen a number of legislative proposals and thoughts that significantly affect the innovation box. In this respect we have taken the liberty to post a number of blogs to clarify these measures, the envisaged changes and their impact on companies. In this first blog we will clarify the limitations (and to a certain extent even broadened scope on) qualifying IP assets for the innovation box. In subsequent blogs we will elaborate on the profit attribution, the R&D expenditure and the transition / grandfathering provisions.
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12 Dec. '17
In this blog we will illustrate the application of the arm’s length principle in case of the implementation of a central purchasing function. This type of transfer pricing analysis ultimately reflects the central importance of the functional analysis in order to understand the role played by each of the parties in the creation of synergies, costs savings, or other integration effects. Which transfer pricing method is the most appropriate will depend on a determination of to which parties the cost savings or inefficiencies created by the centralization of the purchasing function should be allocated.
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12 Dec. '17
The Netherlands government promotes engagement in research and development (R&D) activities through a preferential corporate income tax regime (i.e. the innovation box) and specific R&D tax incentives granted to employers with regard to salaries paid to employees who carry on qualifying R&D activities and related capital expenditures (i.e. the WBSO). In the last few months we have seen a number of legislative proposals and thoughts that significantly affect the innovation box. In this respect we have taken the liberty to post a number of blogs to clarify these measures, the envisaged changes and their impact on companies. The first blog covered the limitation on IP assets. In this second blog we will elaborate on the profit attribution.
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