Netherlands publishes blacklist of low-taxed jurisdictions

The Dutch government emphasizes repeatedly and consistently that the objectives of their approach in domestic and international tax policy matters are to reverse the perception of the Netherlands being considered a tax haven, to actively discourage the use of letterbox companies, but also to create a competitive tax environment to support taxpayers being engaged in ‘real business’ activities. In this backdrop the Netherlands is adopting tax measures targeting entities located in low-taxed jurisdictions.

As the final act in the 2018 legislative process the Dutch government published on 28 December 2018 a list (“Dutch Blacklist”) of low-taxed jurisdictions, being states without a statutory profit tax and states with a statutory profit tax rate of less than 9%. Also on the blacklist are the non-cooperative jurisdictions identified by the EU.

Jurisdictions on the Dutch Blacklist are American Samoa, Anguilla, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Guernsey, Isle of Man, Jersey, Cayman Islands, Kuwait, Qatar, Saudi Arabia, Turks and Caicos Islands, Vanuata, United Arab Emirates, US Virgin Islands, Guam, Samoa, Trinidad and Tobago.

Inclusion of a jurisdiction on the Dutch Blacklist applies for the entire calendar year 2019 with an annual revisit of the list effective the following calendar year.

The effects of being on the Dutch Blacklist are:
(i) the application of CFC rules effective 1 January 2019 unless the substantial economic activity escape applies,
(ii) the non-eligibility as per 1 July 2019 for obtaining an advance tax ruling when in a transaction or corporate structure a blacklisted jurisdiction is involved and
(iii) the application of the (conditional) withholding tax on interest and royalties of 20.5% that is expected to be introduced per 1 January 2021.