Tax changes in 2016

Fiscal Unity
Starting from January 2016, as a consequence of the CJEU Papillon case it will be possible to form a fiscal unity between Dutch companies A and C, even if European company B is in between. The same goes for two subsidiaries B and C, which are held by a European company A.

Transfer Pricing I
In Transfer Pricing, country by country reporting has been introduced. Internationally operating companies with a more than EUR 750mln turnover are required to keep and file ‘country files’, containing commercial and fiscal information per country in which the concern is established.

Transfer Pricing II
For smaller companies, Transfer Pricing compliance changes as well. Starting from a consolidated EUR 50mln turnover, concerns are required to keep a group file and local files. Various kinds of information will become available to tax authorities in all EU countries involved. Fines are due in case of non-compliance. For more information, check our blog on transfer pricing developments.

Dividend Withholding Tax I
In 2015, the EU Court of Justice ruled that some foreign shareholders have been discriminated by Dutch dividend withholding tax legislation. Are you a foreign tax resident paying dividend withholding tax in The Netherlands? You might be entitled to a refund in 2016.

Dividend withholding Tax II
To prevent dividend tax claims on foreign profits, a step-up will be created. This means that in case of a legal merger between a Dutch and foreign company the paid-up capital will be set at the real economic value of the capital that has been transferred to the Dutch entity. This is a good time for re-domiciliation, as The Netherlands will not withhold dividend tax on dividend attributable to profits made before the date of immigration.

Substance requirements for cooperatives get stricter in 2016. If a profit distribution is deemed to be a tax withholding tax evading construction, cooperatives are held to withhold dividend tax. If this concerns you, get in touch with a tax advisor.

Hybrid Financing
In 2016, some dividend/interest payments from foreign participations are no longer tax exempt. This is the case if the payments are deductible costs in the country of origin. In other words: hybrid financing became even more complicated. Let a tax consultant check if your existing arrangements are still participation exemption-proof.

Innovation Box
The 5% CIT rate for research and development (‘innovation box’) is in a transitional period: the innovation facility will be stricter, especially for big companies and companies that do not want to file patents. Rulings concluded before July 2016 will be valid until 2021, so if you still want to benefit from this generous facility, do not postpone your application.

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