12 Oct. '21

On 8 October 2021, a landmark deal has been agreed by 136 countries and jurisdictions representing more than 90% of global GDP to implement the Two-Pillar Solution. The Pillars are aimed at solving tax challenges arising from the digitalization of the global economy. It is estimated that a significant amount of the world’s largest Multinational Enterprises (MNEs) will be impacted by both Pillars. The landmark deal will ensure that MNEs will be subject to a minimum 15% tax rate as from 2023. It will also ensure that more than USD 125 billion of profits of around a hundred of the world’s largest (and most profitable) MNEs will be reallocated, ensuring that these firms pay a fair share of tax wherever they operate and generate profits.

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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 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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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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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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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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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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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

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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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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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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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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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

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

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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