In this year-end update we will, amongst others, touch upon:
The lower corporate tax rate will be increased from 15% to 19%. Furthermore, the threshold amount for application of the lower rate will be lowered. By consequence, the overall CIT liability will be increased for corporate taxpayers.
2023 will also see another increase of the default real estate transfer tax rate – from 8% (2022) to 10.4%. In case of an acquisition of real estate still in 2022, the 8% rate applies. If uncertainties, for example on financing, stand in the way of completing the transfer still in 2022, a transfer under condition subsequent may be a viable option.
Recently, the Dutch state secretary of Finance published an updated decree on the application of the anti-hybrid mismatch rules (ATAD2). The most notable change is an approval (goedkeuring) for specific cost-plus situations. This updated policy decree brings a welcome clarification with retrospective effect that takes away an overkill in the Dutch ATAD2 rules.
Mid-2021 we learned that the legislative proposal on new Dutch entity tax classification rules was postponed and that the FGR is no longer part of this proposal. 1.5 years later and it is still unclear when and how new tax classification rules will come into effect. Currently, more clarity is expected during 2023. Such clarity will expectedly have to be followed up with an analysis of your existing / envisaged fund set-up to mitigate potential adverse tax consequences.
A first proposal draft of the Directive to combat the misuse of shell entities (ATAD3), was published in December 2021. This draft received a lot of input from various stakeholders. We have not received any official legislative updates on ATAD3 since May 2022, but know that the European Commission is working on a second version of the Directive. Informal and rumored developments suggest quite substantial amendments compared to the previous version. Future developments should be closely monitored.
One of the ‘surprises’ of the 2023 Tax Plan was the prohibition for Dutch investment institutions from directly investing in real estate, coming into effect as per 1 January 2024. Dutch investment institutions in-scope of these new measures should take action prior to 2024 to ensure they do not lose their ‘investment institution’-status.
During 2022, the Dutch Supreme Court published several rulings regarding the tax deduction of interest payments of Dutch taxpayers, mainly in private equity structures. In practice, we see more and more discussion with the Dutch tax authorities regarding the tax deductibility of interest paid. In this regard, TP-documentation is becoming increasingly important to substantiate a taxpayer’s position taken.
For more information on the above topics, as well as other relevant developments for the Investment Management industry, see our IM tax update.