As of 1 January 2018, various changes have been implemented in the Dutch Dividend Withholding Tax (“DWT”) Act and Dutch Corporate Income Tax (“CIT”) Act (i.e. the substantial interest taxation rules concerning interests of foreign corporate shareholders in Dutch companies). In connection thereto various decrees have been updated to elaborate on the criterion which requires that a structure is set up for valid business reasons which reflect economic reality. Specifically the decrees contain guidance on the substance required with respect to a foreign intermediary holding company (“Holdco”) holding an interest of 5% or more in a Dutch resident corporate income taxpayer. The substance requirements are alike the substance requirements which already were relevant with respect to so-called financial services companies and with respect to companies aiming to obtain an advance pricing agreement or advance tax ruling from the Dutch tax authorities.
Further, as of 1 April 2018 two additional substance requirements will have to be met:
The cost of living index may reduce the wage cost requirement of € 100,000. Examples of cost of living indexes to be taken into account with respect to other countries are 90% for Cyprus, 60% for Lithuania, 100% for Luxembourg, 80% for Malta, 60% for Poland and 100% for Switzerland.
A further relevant aspect concerns an update of a decree which provides guidance with respect to the requirement that the Dutch tax authorities have to be informed in case the DWT exemption is applied. A form has been released which has to be filled in and submitted with the Dutch tax authorities within one month of such a dividend distribution by a Dutch resident corporate income taxpayer.
Please note that the statutory Dutch DWT rate amounts to 15%. The statutory Dutch CIT rate currently amounts to 25% (20% for profits up to € 200,000). The CIT rate will be lowered to 21% in 2021 (16% for profits up to € 200,000).
As per 1 January 2021, the substance and disclosure requirements for Dutch financial service companies included
On November 6, 2020 Luxembourg and Russia signed a protocol amending the existing double tax treaty, which increases the maximum withholding
The Dutch customs authorities published on 28 September 2020 a notification wherein the application