Beginning on January 1, Dutch companies that are predominantly involved in intra-group back-to-back lending, licensing, or leasing transactions and that seek benefits under a tax treaty or the EU Interest & Royalty Directive with respect to their income must report in their tax return that they meet certain minimum substance requirements. If not all requirements are met, the Netherlands will exchange information with source countries. The new substance requirements are the following:
- At least 50 percent of the statutory directors with the authority to vote on the board is Dutch resident, with sufficient knowledge to carry out their duties;
- The company should have sufficient staff—employed by the company or hired from a third party—to carry out its activities
- The resolutions of the board are passed in the Netherlands;
- The company should manage its main bank accounts from the Netherlands;
- The company should have a Dutch address;
- The company should keep its books in the Netherlands;
- The company is not regarded as a tax resident of another country;
- The company runs a real risk with respect to its activities within the meaning of the law; and
- The company's equity is appropriate in view of its real risks.
Very similar requirements have already been in existence since 2001 for companies that seek to obtain an Advance Tax Ruling and/or Advance Pricing Agreement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
