As per 1 January 2021, the substance and disclosure requirements for Dutch financial service companies included in the Decree to the International Assistance with Levying Taxes Act (Uitvoeringsbesluit internationale bijstandsverlening bij de heffing van belastingen) (Decree) will be made stricter. Pursuant to these changes, financial service companies shall have to comply with the following additional substance requirements:
Please find below more information on the background of the substance and disclosure rules for Dutch financial service companies, the list of substance requirements effective as per 1 January 2021 and an update on possible substance and disclosure rules for substance lacking Dutch resident corporate income taxpayers that act as an intermediary holding company and which apply the Dutch participation exemption.
As per 1 January 2014 certain statutory disclosure requirements for financial service companies have been introduced in Dutch tax laws. In case a qualifying Dutch corporate income tax (CIT) payer does not meet one or more of the substance requirements it has to disclose this information in its CIT return. This information will be exchanged by the Dutch tax authorities to the relevant source country. Failure to comply with any of these information requirements is an offence, which may result in a penalty being imposed amounting to maximum EUR 20,750 (applicable in 2020) in case of premeditation or gross negligence. A qualifying CIT payer is any CIT payer of which the activities mainly (70% or more) consist of the direct or indirect receipt and payment of interest, royalties, rent or lease terms, in any form whatsoever, from and to non-resident entities which belong to the same group as the taxpayer. For the assessment of the 70% criteria, holding activities are not taken into account.
Substance requirements for financial service companies
As of 2021, the substance requirements for Dutch financial service companies will be as follows:
Dutch participation exemption – possible information exchange for substance lacking intermediary holding companies
Recently, Dutch State Secretary for Finance announced the Dutch government will further investigate whether substance and disclosure requirements will be introduced for substance lacking intermediary holding companies which apply the Dutch participation exemption which would be similar to the above described rules for Dutch financial service companies. It will be investigated whether it is possible to introduce the substance and disclosure requirements for substance lacking intermediary holding companies per 1 January 2022.
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