Life Sciences Bit: 2019 Dutch Budget: abolishment of the dividend withholding tax and introduction of earnings stripping and CFC rules
On 18 September 2018, Dutch government published its 2019 Dutch Budget (the Budget).
The Budget includes several tax proposals which may have an impact on Life Sciences companies with operations in the Netherlands. We will briefly describe the main tax proposals below.t includes a proposal to abolish the existing dividend withholding tax, replacing it with a withholding tax on dividend payments to related entities in low-tax jurisdictions and in cases of abuse as of 1 January 2020.
In a separate proposal, implementing the EU Anti-Tax Avoidance Directive (ATAD1) new rules are introduced on the deductibility of interest (earnings stripping rules) and on taxation of Controlled Foreign Companies (CFC rules). These provisions should enter into force per 1 January 2019.
Other relevant proposed changes (entering into force on 1 January 2019 unless indicated otherwise) in the Budget are:
- Reduction of the main corporate income tax rate to 24.3% in 2019, to 23.9% in 2020 and to 22.25% in 2021.
- Limitation of loss carry forward from nine years to six years for losses incurred.
- Abolishment of the restriction of compensation of holding and financing losses incurred.
- Abolishment of certain specific interest deduction provisions (i.e. art. 13l and 15ad of the Dutch corporate income tax act (CITA)).
Should you have any questions regarding the tax proposals in the Budget, please do not hesitate to contact Michiel Schul or your permanent Loyens & Loeff advisor.
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Michiel SchulPartner Tax adviser
Michiel Schul is a partner in Loyens & Loeff’s International Tax Services practice group and a member of the Energy Team and the US Region Team. From 2011 to 2013 he worked in Loyens & Loeff’s New York office.T: +31 20 578 53 38 M: +31 6 51 88 64 01 E: [email protected]