Dutch corporate income tax changes 2013
On December 18 th, 2012 the Dutch Ministry of Finance issued an overview of the changes in the Dutch corporate income tax legislation as per January 1st, 2013. We hereby provide you with a brief overview of the 2013 Dutch corporate income tax changes which include:
- Limitation on excessive participation interest
- Abolishment Dutch thin-capitalization rules
- Broadening foreign taxpayer rules directors’ fees
- Tightening anti-abuse rules reinvestment allowances
For a PDF memorandum regarding the changes we refer to our 2013 Dutch corporate income tax changes memorandum.
On January 1st, 2013, a new restriction of deductibility of interest and costs relating to domestic or foreign participations has become effective. The new regulation limits the deduction of interest and costs of loans relating to a participation (participation debt) insofar as the expenses (interest and costs of loans) exceed EUR 750,000 a year.
The Dutch thin-capitalization rules have been abolished as per January 1st, 2013. Companies setting up real business in the Netherlands are no longer hindered by their chosen finance structure. This allows for tax efficient leveraged asset deals.
As per January 1st, 2013, the foreign taxpayer rules regarding directors’ fees have broadened. The legislation has been altered to extend the scope of the Dutch foreign corporate income tax liability for directors' fees to also include the remuneration for "factual management services" (the "Extended Director Taxation"). The Extended Director Taxation includes management services and other non-statutory management fees. Based on the new legislation fees for de facto managing the Dutch company are subject to Dutch corporate income tax.
The legislation is targeted at perceived abusive Belgian management structures. These structures would likely be affected because of the comprehensive wording of the directors’ article in the Belgian Netherlands tax treaty. The Extended Director Taxation is also likely to affect all expenses relating to management services provided by entities in non-tax treaty jurisdictions. Because of the broad scope, this is something to take into consideration when deciding how to structure your management fee.
The anti-abuse rules regarding the trade in companies which have a reinvestment allowance have been tightened and made less ambiguous. When buying a company with a reinvestment allowance it is worthwhile to determine if it would be possible to utilize the reinvestment allowance after you bought the company.