In general, the Dutch Tax Authorities do not impose specific requirements on companies established in the Netherlands with regard to transparency on financial flows to and from low-taxed states or states appearing on the EU list of non-cooperative jurisdictions for tax purposes. This answers the Dutch State Secretary of Finance Mr Vijlbrief, to questions from Dutch MP’s on violation of OECD Guidelines for Multinational Enterprises by Pluspetrol on activities carried out in Peru. The concerned Q&A is as follows.
Does the Tax Authorities set requirements for multinational companies established in the Netherlands with regard to transparency on financial flows from and to other states, in particular towards low-taxed jurisdictions or states appearing on the EU blacklist?
Although the Dutch Tax Authorities do not generally impose requirements on companies established in the Netherlands regarding transparency on financial flows to and from low-taxed states or states on the EU list of non-cooperative jurisdictions for tax purposes (so-called low-taxed states) 2, taxpayers are required to take into account the Dutch tax (compliance) implications of such financial flows/transactions. Where appropriate, taxpayers should report the relevant aspects related to such funding in their tax returns. For example, a dividend distributed by a Dutch company to a shareholder established in a low-taxed or non-cooperative state must be reported in a dividend withholding tax return whenever Dutch dividend withholding tax is due. In addition, e.g., the newly introduced earnings stripping rule is likely to limit deduction of interest for corporate income tax purposes in case of a loan from a low-taxed or non-cooperative state. For this purpose specific questions were included in the 2019 corporate income tax return.
Another example concerns the new Controlled Foreign Companies (CFC) measure introduced as of January 1, 2019. This CFC measure is also part of the Dutch implementation of the EU Anti-Tax Avoidance Directive (ATAD1) 3 . Furthermore, as a final example, interest and royalty payments to affiliated entities established in designated states will be subject to a conditional withholding tax as of January 1, 2021.
Finally, it should be noted that since July 1, 2019, the Dutch Tax Authorities no longer provide certainty in advance about the tax consequences of transactions with entities established in these designated states (so-called advance tax ruling).