(September 15, 2015)
As we reported earlier, on September 11, 2015 the Dutch Ministry of Finance published a law proposal to implement Council Directive 2014/107/EU of December 9, 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation and to implement the Common Reporting Standard (CRS) as developed by the OECD. For this implementation the law proposal proposes to make amendments to the Wet op de internationale bijstandsverlening bij de heffing van belastingen (WIB) and the Belastingwet BES.
Since the law proposal is in Dutch, below we will highlight a selection of the amendments that are included in the law proposal. To do so we drafted an UNOFFICIAL ENGLISH translation of a SELECTION of provisions that are included in the law proposal. It is the intention of the Dutch Government that the proposed amendments enter into force as per January 1, 2016.
WIB (Law regarding the international assistance in the collection of taxes)
The law proposal introduces new definitions into the WIB. As it could be expected, these definitions are largely similar to those given in Council Directive 2014/107/EU. Furthermore the law proposal a.o. introduces obligations on behalf of the automatic exchange of information in accordance with the Common Reporting Standard for reporting institution.
Definitions
Article 2a
The law proposal a.o. contains a new Article 2A to be included in the WIB.
1. For the application of this article and section 4A and the provisions based thereupon the following terms mean:
a. a reporting financial institution: a Dutch financial institution, not being a non-reporting financial institution;
b. a Dutch financial institution:
(i) a financial institution residing in the Netherlands with the exemption of branches of said institution that are not located in the Netherlands;
(ii) a Dutch branch of a financial institution that is not residing in the Netherlands;
c. financial institution: a financial institution as meant in Annex I Directive 2011/16/EU, Section VIII, Part A, under 3 through 8;
d. non-reporting financial institution: a non-reporting financial institution as meant in Annex I to Directive 2011/16/EU, Section VIII, Part B, under 1 sub a, b, d and e and under 2 through 9, as well as a financial institution appointed as such by the Minister, taking into account Annex I Directive 2011/16/EU, Section VIII, Part B, under 1, sub c of Directive 2011/16/EU and that is included in the list as meant in Article 8, Paragraph 7 bis;
e. financial institution in a participating jurisdiction:
(i) a financial institution residing in a participating jurisdiction, with the exemption of branches of said financial institution that are not located in that jurisdiction;
(ii) a branch located in a participating jurisdiction of a financial institution that is not residing in that jurisdiction;
f. participating jurisdiction:
(i) an other Member State;
(ii) a jurisdiction with which the country the Netherlands has concluded an agreement based on which that jurisdiction will provide information as meant in the articles 10b and 10c and that is included on a list that the Netherlands has published and sent to the European Commission;
(iii) an other jurisdiction with which the European Union has concluded an agreement based on which that jurisdiction will provide information as meant in the articles 10b and 10c and that is included on a list that was published by the European Commission;
g. financial account: a financial account as meant in Annex I to Directive 2011/16/EU, Section VIII, Part C, under 1 through 8, not being an excluded account;
h. excluded account: an excluded account as meant in Annex I to Directive 2011/16/EU, Section VIII, Part C, under 17, sub a through f, as well as an account appointed as such by the Minister, taking into account Annex I to Directive 2011/16/EU, Section VIII, Part C, under 17, sub g and that is included in the list as meant in Article 8, Paragraph 7 bis of Directive 2011/16/EU;
i. depository account: a depository account as meant in Annex I to Directive 2011/16/EU, Section VIII, Part C, under 2;
j. custodial account: a custodial account as meant in Annex I to Directive 2011/16/EU, Section VIII, Part C, under 3;
k. annuity contract: an annuity contract as meant in Annex I to Directive 2011/16/EU, Section VIII, Part C, under 6;
l. cash value insurance contract: a cash value insurance contract as meant in Annex I to Directive 2011/16/EU, Section VIII, Part C, under 7;
m. pre-existing account:
(i) a financial account that was maintained by a reporting financial institution as per December 31, 2015;
(ii) a financial account as meant in Annex I to Directive 2011/16/EU, Section VIII, Part C, under 9, sub b;
n. new account: a financial account as meant in Annex I to Directive 2011/16/EU, Section VIII, Part C, under 10, sub b;
o. reportable account; a financial account that, with taken into account Annex II to Directive 2011/16/EU, under 4 is maintained by a reporting financial institution and that with taking into account Annex I to Directive 2011/16/EU, Section VIII, Part E, under 1 is held by one or more reportable persons or by a passive NFE with one or more ultimate beneficiaries that is/are (a) reportable person(s), provided that the account as such is appointed as such based in the identification and reporting regulations meant in Article 10a;
p. reportable person: a person from a participating jurisdiction, not being:
(i) a corporation the stock of which is regularly traded on one or more established securities markets;
(ii) any corporation that is a related entity of a corporation described in clause (i);
(iii) a Governmental entity as meant in Annex I to Directive 2011/16/EU, Section VIII, Part B, under 2;
(iv) an international organization as meant in Annex I to Directive 2011/16/EU, Section VIII, Part B, under 3;
(v) a central bank as meant in Annex I to Directive 2011/16/EU, Section VIII, Part B, under 4;
(vi) a financial institution.
q. person from a participating jurisdiction:
(i) an individual or entity that is resident in a participating jurisdiction under the tax laws of that jurisdiction;
(ii) an estate of a decedent that was a resident of a participating jurisdiction;
r. related entity of another entity: an entity that is related to another entity as meant in Annex I to Directive 2011/16/EU, Section VIII, Part E, under 4;
s. ultimate beneficiaries: the ultimate beneficiaries as meant in Annex I Directive 2011/16/EU, Section VIII, Part D, under 5; (International Tax Plaza: “Annex I to Directive 2011/16/EU, Section VIII, Part D, under 5 gives the definition of the term “Controlling Persons””)
t. non-financial entity (NFE): an entity not being a financial entity;
u. entity: an entity as meant in Annex I, Section VIII, Part E, under 3 of Directive 2011/16/EU;
v. passive non-financial entity (NFE):
(i) an NFE that is not an active NFE;
(ii) an investment entity as meant in Annex I to Directive 2011/16/EU, Section VIII, Part A, under 6, sub b that is not a financial institution in the country the Netherlands or in a participating jurisdiction;
w. active non-financial entity (active NFE): an active NFE as meant in Annex I Directive 2011/16/EU, Section VIII, Part D, under 8;
x. account holder: an account holder as meant in Annex I to Directive 2011/16/EU, Section VIII, Part E, under 1;
y. financial assets: financial assets as meant in Annex I to Directive 2011/16/EU, Section VIII, Part A, under 7;
z. the country the Netherlands: the Netherlands and the BES islands as meant in Article 2, Paragraph 3, sub d under 4 of the Algemene wet inzake rijksbelastingen.
2. For the application of Paragraph 1, sub b and e, the place of residence of a financial institution is determined with taking into account Annex II to Directive 2011/16/EU.
3. For the application of Paragraph 1, sub q, an entity without a fiscal place of residence will, with taking into account of Annex II to Directive 2011/16/EU, under 5, be treated as a resident of the jurisdiction where the place of its effective management is located.
4. For the application of the first, second and the third Paragraph where directly or indirectly a reference is made to the provisions in the Annexes I and II to Directive 2011/16/EU, in said provisions, for as far as these do not already apply to other areas of law a Member State also includes other jurisdictions than the Member State.
5. For the application of Paragraph 1, sub p and q a participating jurisdiction also includes a jurisdiction with which the country the Netherlands has concluded an agreement based on which the country the Netherlands will provide information as meant in the articles 10b and 10c to that jurisdiction. For the application of the Paragraph 1, p and q in deviation from Paragraph 1, sub f, a jurisdiction with which the country the Netherlands has concluded an agreement based on which that jurisdiction will provide information as meant in the articles 10b and 10c to the country the Netherlands, while the Netherlands is not obliged to provide such information to that jurisdiction, that jurisdiction will be considered a non-participating jurisdiction.
6. For the application of the articles 6c, 10a, 10b, 10d and 10e and the provisions based thereupon the term tax identification number also includes the functional equivalent thereof.
Obligations on behalf of the automatic exchange of information in accordance with the Common Reporting Standard
After Article 10 of the WIB a new Section 4A titled “Obligations on behalf of the automatic exchange of information in accordance with the Common Reporting Standard” is inserted.
Article 10a
A new article 10a will be included in the WIB.
Via a general administrative order identification and reporting regulations will be introduced for reporting financial institutions regarding the data and information as meant in the articles 10b through 10f such institutions have to provide and regarding the identification of reportable accounts and of reportable persons.
Article 10b
A new article 10b will be included in the WIB.
1. A reporting financial institution annually provides our Minister with the following data and information regarding each of the reportable accounts maintained by that financial institution:
a. the name, address, fiscal place of residence and the Tax Information Number of the reportable persons that are account holders of the account;
b. in case the reportable person as meant under a is an individual: the date of birth and the place of birth of that individual;
c. in case the reportable person is an entity of which based on the reporting regulations as meant in Article 10a it has been identified as having one or more Controlling Persons that is a/are Reportable Person(s):
(i) the name, address, fiscal place of residence and the Tax Identification Number of that entity;
(ii) the name, address, fiscal place of residence and the Tax Identification Number of the reportable person;
d. The account number, or in the absence of an account number, the functional equivalent thereof;
e. The name and identification number of the reporting financial institution;
f. the account balance or value of the account, in the case of a Cash Value Insurance Contract or Annuity Contract, the Cash Value or surrender value, as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed during such year or period, the closure of the account;
2. A reporting financial institution report with the date and information as meant in Paragraph 1, sub f, with respect to each amount the currency of the amount reported;
3. Via a general administrative order regulations will be introduced with respect to the deadline and the way by which the data and information as meant in Paragraph 1 are to be provided to our Minister.
Article 10c
A new article 10c will be included in the WIB.
1. A reporting financial institution annually provides our Minister with the following data and information regarding each of the reportable accounts maintained by that financial institution:
a. In case of a custodial account:
(i) the total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year or other appropriate reporting period; and
(ii) the total gross proceeds from the sale or redemption of Financial Assets paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder;
b. in the case of any Depository Account, the total gross amount of interest paid or credited to the account during the calendar year or other appropriate reporting period;
c. in the case of any account not described in sub a and b, the total gross amount paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting Financial Institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the Account Holder during the calendar year or other appropriate reporting period.
2. Article 10b, Paragraph 2 and Paragraph 3 shall apply mutatis mutandis.
Article 10d
A new article 10d will be included in the WIB.
1. In deviation from Article 10b, Paragraph 1, sub a, b and c with respect to a pre-existing account a reporting financial institution is not obliged to provide the Tax Identification Number, respectively the date of birth if that Tax Identification Number or date of birth is not available in the file of the reporting financial institution and the reporting financial institution is not obliged under other legislation or under any legal instrument of the European Union to collect that data.
2. A reporting financial institution undertakes reasonable efforts in order to obtain the Tax Identification Number, as meant in Paragraph 1, and the date of birth as meant in Paragraph 1, no later than at the end of second calendar year following to that in which a pre-existing account has been considered to be a reportable account.
Article 10e
A new article 10e will be included in the WIB.
In deviation to Article 10b, Paragraph 1, sub a and c, a reporting financial institution is not obliged to provide the Tax Identification Number of a reportable person or account holder in case the State in which that reportable person or account holder did not provide him with a Tax Identification Number.
Article 10f
A new article 10f will be included in the WIB.
In deviation from Article 10b, Paragraph 1, sub b, a reporting financial institution is not obliged to provide the place of birth of a reportable person, unless:
a. The reporting financial institution according to other legislation or according to any legal instrument of the European Union that is in force or was in force on January 5, 2015 is or was obliged to obtain and report that place of birth; and
b. The place of birth is available in electronic searchable data that are being maintained by the reporting financial institution.
Belastingwet BES (Tax law BES)
After Article 8.133 a new Section is inserted. This newly to be inserted section is Section 4A Obligations on behalf of the automatic exchange of information in accordance with the Common Reporting Standard.
Article 8.133a
1. Article 2a and Section 4A of the Wet op de internationale bijstandsverlening bij de heffing van belastingen, with the exception of Article 2a, paragraph 1, sub a, b and f under 3 of that law, also apply to a reporting financial institution.
2. For the application of this article and the provisions based thereupon the following terms mean:
a. reporting financial institution: a financial institution on the BES Islands, not being a non-reporting financial institution;
b. financial institution on the BES Islands:
(i) A financial institution that is residing on the BES Islands, with the exception of branches of that financial institution that are not located on the BES Islands;
(ii) A branch located on the BES Islands of a financial institution that is not a resident of the BES Islands;
3. In the corresponding application of Article 2a and Section 4A of the Wet op de internationale bijstandsverlening bij de heffing van belastingen, as meant in Paragraph 1:
a. a non-reporting financial institution also means a financial institution that is appointed by a Ministerial Regulation as a financial institution with a low risk of being used for tax evasion;
b. an excluded account also means a financial account that is appointed by a Ministerial Regulation as a financial account with a low risk of being used for tax evasion;
whereby a financial institution or account can only be appointed if it meets the conditions that financial institutions, respectively accounts have to meet in order to be able to be appointed by our Minister as a non-reporting financial institution, respectively account, based on Article 2a, Paragraph 1 of the Wet op de internationale bijstandsverlening bij de heffing van belastingen.
Article III of the law proposal states that this law will apply for the first time to the date in the information for the calendar year 2016.
We emphasize that the UNOFFICIAL TRANSLATION provided above is merely meant to provide you with some general understanding of a SELECTION of the provisions included in the LAW PROPOSAL for the Wet uitvoering Common Reporting Standard and is no way meant to constitute an advice of any kind. The above can under NO circumstances be relied upon. Before taking any action or not taking any action you should always consult the official Dutch version of the final law when it enters into force and you should always consult an expert before taking any action or before not taking any action. Although International Tax Plaza did its utmost best to provide you with an as accurate as possible English translation, International Tax Plaza and/or its owners will not accept any liability for damages caused when you take action relying on the UNOFFICIAL TRANSLATION provided above.
Click here to be forwarded to the (Dutch) text of the law proposal as published on September 11, 2015 on the website of the Dutch Ministry of Finance.
Click here to be forwarded to the Memorie van Toelichting to this law proposal as published on September 11, 2015 on the website of the Dutch Ministry of Finance.
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