From changes to the Excessive Loans Act (Wet excessief lenen) through to adjustments to the scheme for small enterprises, the 2024 Tax Plan also includes changes in the area of international taxation. Below we set out the most important changes that will apply to you as an entrepreneur operating internationally.
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Changes to excessive loans
Change to scheme for small enterprises
Implementation of Payment Services Directive
Change to place of taxation for VAT on virtual services
Extended period for post-clearance recovery by customs authorities brought into line with regular period
Classification of (foreign) legal forms: two additional methods
Minimum Tax Act for large international companies
Final dividend-tax levy upon departure from the Netherlands
Prevention of dividend tax avoidance
ATAD 3 – abuse by shell companies
With effect from 2023 restrictions have applied to excessive loans received from your own company. Previously, borrowing money from their own company allowed substantial shareholders to defer taxation in box 2. Since 2023 this has applied to loans from your own company of more than € 700,000, with the amount exceeding € 700,000 (the excessive loan) being taxed in box 2.
If you emigrate as a substantial shareholder, you are deemed to have undertaken a fictitious sale of the substantial shareholding. At the time of emigration you therefore owe tax on the substantial shareholding in box 2, which is paid on the difference between the actual value of the shares and the acquisition price. As a director/major shareholder (DGA) you do not have to pay this tax immediately, as a protective assessment with deferment of payments is imposed. An undesirable outcome that is now being remedied concerns the situation in which payment of the protective assessment is demanded at the point when, following emigration, the substantial shareholder takes out an excessive loan from a new company based abroad.
From 1 January 2025 the Directive relating to the scheme for small enterprises will be implemented. This will make it possible for small enterprises with activities in a Member State other than the one in which they are based to apply the scheme for small enterprises of that other Member State. An EU turnover threshold of € 100,000 will, however, apply in addition to the national threshold in the Member State.
A number of aspects of the Dutch scheme are being changed to ensure it is better aligned with the new European scheme. The minimum application period of three years is being withdrawn, for example. However, the notice period of four weeks prior to the start of a tax period will continue to apply.
Thanks to the Act implementing the Payment Services Directive (Wet implementatie Richtlijn betalingsdienstaanbieders), from 1 January 2024 the Tax and Customs Administration will acquire more extensive powers to carry out controls. The Tax and Customs Administration will be able to use information relating to cross-border payments. This specifically concerns payments made by a consumer to a seller in another EU Member State or outside the EU. The EU is developing a central system for the collection and exchange of payment information by EU Member States (CESOP). Fraud experts in the Member States will analyse the payment information collected. The findings will be exchanged with the other Member States and will support efforts to combat VAT fraud.
With effect from 1 January 2025 VAT on cross-border virtual services will be payable in the Member State where the purchaser of the service is established. This is referred to as the ’Member State of consumption’. This change to the regulations will relate to various services, including cultural, artistic, sports, scientific, educational and entertainment services.
Under current customs legislation the standard period for the post-clearance recovery of customs duties is three years, with the possibility of applying an extended period of five years in specific cases (criminal acts). Until recently, however, the customs authorities often applied the extended period in the event of any error being identified in the customs declaration. As a result, the regular period of three years was rarely used. The extended period will therefore be reduced to three years.
To assess whether a foreign legal form is transparent (not independently subject to tax) or opaque (subject to tax), the legal form comparison method is currently used for the purposes of applying Dutch tax law. An important aspect within this context is whether the legal form is classified as a capital company or a partnership. This was laid down in a Decree dating from 2009. It is now being proposed that this be enshrined in law.
There are also situations in which the Netherlands regards the foreign legal form as transparent, while another country considers it opaque, or vice versa. We refer to this as a ‘hybrid mismatch’. This difference in classification leads to different tax treatment in both countries. A situation of double taxation or double non-taxation can result from this.
To avoid these two situations, two methods are being introduced – in addition to the 2009 Decree – for the classification of foreign legal forms: the symmetrical and the fixed method. A condition for applying these alternative methods is that the foreign legal form cannot be compared with a Dutch legal form on the basis of the legal form comparison method. It is being proposed that these additions also be enshrined in law.
The introduction of a global minimum rate of profit tax of 15% is designed to create a more level playing field. From 2024 these regulations will apply to multinationals that generate a global annual turnover of € 750 million or more and effectively pay less than 15% tax on their profit.
The Tax and Customs Administration will be authorised to take action if it appears that a company, or a part thereof, is effectively paying less than 15% tax elsewhere on its profit. In such cases the Tax and Customs Administration will be able to apply an additional levy to bring the effective rate up to 15%.
If a multinational decides to relocate its head office from the Netherlands to another country, the Netherlands may lose its claim to dividend tax. As a result, under certain conditions, final settlement will take place at the time of emigration, under the new Conditional Final Settlement of Dividend Tax Act (Wet conditionele eindafrekening dividendbelasting). There is no option to defer payments or obtain a waiver.
Companies with a profit reserve of more than € 50 million will owe dividend tax on leaving the Netherlands for a non-EU country in the following situations:
If the Dutch dividend tax claim is exchanged for a comparable foreign claim, the levy does not apply. In addition, final settlement is not applied if the exemption from dividend withholding tax in participatory relationships applies.
To avoid double non-taxation of dividend payments made from the Netherlands, from 1 January 2024 a withholding tax will be introduced on such payments, which will be equal to the highest rate of corporation tax (25.8% in 2023). This withholding tax will apply to Dutch companies that distribute dividends to foreign shareholders in the following scenarios:
Payments made in return for capital injections by founders, shareholders, members or participants will also be regarded as dividends for purposes of the withholding tax. Furthermore, this additional withholding tax will also apply to artificial structures set up with the aim of avoiding Dutch dividend withholding tax.
Finally, this withholding tax will be payable even if there is an existing tax treaty between the Netherlands and the country concerned.
Dividend stripping refers to a situation in which a company wrongly reclaims dividend tax. One structure used to do this involves a temporary transfer of ownership by a body that is not entitled to refunds of dividend tax to a body that is entitled to them. Within this context it is stipulated contractually that the economic benefit and, for example, the exchange risk remain with the transferring party. The burden of proof for plausibly demonstrating that the recipient of the dividend is not the beneficial owner currently rests with the inspector.
The caretaker government is introducing two measures that will allow dividend stripping to be tackled more effectively:
This is expected to allow the inspector to access relevant information at an earlier stage and improve his position as regards the burden of proof.
On 22 December 2021 the European Commission published a proposal for a Directive (ATAD 3) aimed at combating the use of shell entities (also known as ‘letter-box entities’) for abusive tax purposes. The European Commission intends to apply ATAD 3 from 1 January 2024. Whether this date is feasible for its entry into force is still unclear.
The proposal means, amongst other things, that entities in the EU with no or minimal economic activities will be subject to new reporting obligations. They will also not qualify for certain tax advantages.
Any entity that is subject to tax and has cross-border activities may come up against this Directive. An entity is considered to be a shell company if:
In addition to these three criteria, a rebuttal provision has been included for shell entities, who will have the opportunity to demonstrate that they were established on the basis of commercial considerations and to provide information on their staff and the place where taxing rights are held.
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