New developments regarding Netherlands substance requirements

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.


09 Apr. '18
Gert-Jan Hop

In recent Blogs we have discussed the impact of legislative amendments implemented in the Dutch WTA and CIT Act effective from 1 January 2018. These amendments aimed to eliminate the difference between holding cooperatives and public (NV’s) and limited (BV’s) liability companies. In particular the broadened general exemption from the withholding obligation for NV’s and BV’s has been welcomed. The new law however requires intermediate holding companies to satisfy additional substance requirements: employment costs of at least EUR 100,000 (dependent upon the domestic price level) in relation to its intermediary holding functions should be available; the employees must have the professional knowledge and capacity to be able to properly perform their duties; and the holding company has office space at its disposal (for at least 24 months) from which the intermediary holding functions are being undertaken.

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. Once we have received additional information, and the corresponding impact on the aforementioned substance requirements, we will post another news item. Please also note (and observing the December 2017 the The Hague Court case) that in applying the substance requirement there needs to be (in any case) a functional attribution between the shares in (among others) the Netherlands company distributing the dividend and the parent company.


Gert-Jan Hop

Gert-Jan Hop is a tax lawyer with over twelve years of experience gained in the field of tax advise for larger multinational companies and high net worth individuals.

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