New Dutch coalition government presents policy roadmap - changes in Dutch tax law expected

After many months of talks a new coalition government has presented on 10 October 2017 to Parliament a roadmap of its policy views for the next 4 years.

Some highlights of the proposed tax measures are:

• Lowering of the corporate income tax rate gradually from 25% to 21% (rate for profits up to EUR 200,000 will be lowered from 20% to 16%) in 2021
   
• Abolishment of dividend withholding tax as of 2020, except in case of abusive situations and payments to low tax jurisdictions
   
• Introduction of a withholding tax on interest and royalty payments (as of 2023) by certain financial service companies to recipients in low tax jurisdictions
   
• Promote equity financing by taxpayers and, in accordance with EU Directive ATAD 1, introduce a new earnings strippings deduction limitation, which will restrict the deductibility of (un)related party interest when exceeding a threshold of EUR 1,000,000 without allowing a ´group escape´
   
• Limit the tax loss carry forward facility from 9 to 6 years
   
• Increase the effective rate of the innovation box from 5% to 7%
   
• Publish a blacklist of non cooperative jurisdictions to combat tax avoidance
   
• Tightening of trust offices regulations
   
• Disallow direct investments in real estate by fiscal institutions
   
• Limit the depreciation of real estate
   
• Increase of the low VAT rate from 6% to 9%
   
• Maximize the duration of the tax free allowance facility for expats from 8 to 5 years

The roadmap does not provide detailed guidance as to the exact legislative implementation and timing of the tax measures, it only sets out a general framework for future legislation.

Where one of the proposed measure is the abolishment of the dividend withholding tax as of 2020, many questions arise as how this measure interacts with earlier announced legislative changes on 19 September last aiming to expand as from 2018 onwards the dividend withholding tax exemption to qualifying corporate tax treaty resident recipients. Our take is that further clarification will be provided in the next weeks during the upcoming legislative process of the draft bill. A softening or a repeal of the earlier draft bill may be an option.