The new scheme also provides for various anti-abuse provisions, such as look-through rules for the liquidation of an intermediate holding company.Ĭomparable limitations are enacted for the cessation loss scheme for PEs. For subsidiaries not yet liquidated at the time this measure took effect, in principle, no transitional rules will apply with regard to the quantitative and the territorial condition, but, in certain situations, such rules will apply with regard to the ring-fencing requirement. The ring-fencing requirement will not be strictly enforced if there is a non-tax reason for not complying with the condition. A liquidation loss is only deductible if the liquidation takes place within a period of 3 calendar years after the calendar year in which the business of the subsidiary has totally or almost totally ceased operating or the decision to do so was taken. In addition, a ring-fencing requirement is applicable. the dissolved entity is established in the Netherlands, another European Union (EU) member state, the European Economic Area (EEA) or a state with which the EU has concluded a specific association agreement (territorial condition).the taxpayer holds a qualifying interest in the dissolved entity in terms of control (quantitative condition) and.A liquidation loss of a subsidiary, insofar as it amounts to more than EUR5 million per subsidiary, is only deductible if: The liquidation and cessation loss schemes are tightened with effect as of 1 January 2021. In short, the WHT applies to interest and royalty payments made by an entity established in the Netherlands, including permanent establishments (PEs), to an affiliated entity established in a low-taxed country (corporate tax rate of less than 9 percent or appearing on the EU list of non-cooperative jurisdictions), to hybrid entities or in abusive situations. Withholding tax (WHT) on interest and royalties as of 2021Īs of 1 January 2021, a WHT of 25 percent (equal to the highest CIT rate) may be applicable to the arm’s length interest and royalty payments made by an entity established in the Netherlands. Furthermore, the Dutch government increased the effective Innovation Box rate from 7 percent to 9 percent as per 1 January 2021.

Additionally, it is planned for 2022 that the first bracket will be extended further to a taxable profit up to EUR395,000. The regular CIT rate in excess of EUR245,000 therefore remains at 25 percent in 2021. The reduction of the general CIT rate from 25 percent to 21.7 percent as of 1 January 2021, which had been adopted in 2019, has been cancelled. The CIT rate for profits up to 245,000 euros (EUR) has been reduced to 15 percent (2020: 16.5 percent through to EUR200,000). The combined CIT rate has been reduced as of 1 January 2021.

Reduction of corporate income tax (CIT) rates This summary also discusses some government plans based on statements as announced in the Tax Plan 2021 and/or during 2020. This summary of recent Dutch tax developments is based on current tax legislation up to and including the Tax Plan 2021, which mainly took effect as of 1 January 2021.

Active company lookthrough expires