On January 13, 2016 the Rijkswet van 23 december 2015, houdende regeling voor Nederland en Sint Maarten tot het vermijden van dubbele belasting en het voorkomen van het ontgaan van belasting met betrekking tot belastingen naar het inkomen en een woonplaatsfictie ter zake van erf- en schenkbelasting (Belastingregeling Nederland Sint Maarten) (Hereafter: Rijkswet) was published on the website of the Dutch Staatsblad van het Koninkrijk der Nederlanden.
The new law is going to replace the Belastingregeling voor het Koninkrijk (hereinafter: BRK) which has been applicable between the countries of the Netherlands since 1965. The BRK is a multilateral instrument to avoid double taxation and to prevent fiscal evasion. The Rijkswet is a bilateral instrument to avoid double taxation and to prevent fiscal evasion. Although the Rijkswet is a law and not a DTA, it has a structure that is somewhat similar to that of a regular DTA.
Entry into force
Based on Article 36 of the Rijkswet the fact that it was published in the Staatsblad on January 13, 2016 means that it will enter into force on the first day of the second month following the publication in the Staatsblad (March 1, 2016).
Subsequently the provisions of the Rijkswet shall have effect:
· in respect of taxes withheld at source, to income derived on or after January 1, 2017; and
· in respect of other taxes, to taxes chargeable for any taxable year beginning on or after January 1, 2017.
Below we will discuss a selection of provisions included in the Belastingregeling of which we think they might interest our readers:
Taxes covered
According to Article 2, Paragraph 3 of the Rijkswet (“Belastingen waarop de rijkswet van toepassing is”) the existing taxes to which the DTA shall apply are:
a) in the case of the European Part of the Netherlands:
(i) de inkomstenbelasting;
(ii) de loonbelasting;
(iii) de vennootschapsbelasting, daaronder begrepen het aandeel van de regering in de nettowinsten behaald met de exploitatie van natuurlijke rijkdommen geheven krachtens de Mijnbouwwet;
(iv) de dividendbelasting; and
in the case of the Caribbean Part of the Netherlands:
(i) de inkomstenbelasting;
(ii) de loonbelasting;
(iii) de vastgoedbelasting;
(iv) de opbrengstbelasting;
(v) het aandeel van de regering in de nettowinsten behaald met de exploitatie van natuurlijke rijkdommen geheven krachtens de Mijnwet BES, het Mijnbesluit BES of de Petroleumwet Saba Bank BES;
b) in the case of Sint Maarten:
(i) de inkomstenbelasting;
(ii) de loonbelasting;
(iii) de winstbelasting; and
(iv) de dividendbelasting.
Article 2, Paragraph 4 of the Rijkswet subsequently arranges that it shall apply also to any identical or substantially similar taxes, which are imposed after the date of entering into force of the Rijkswet in addition to, or in place of, the existing taxes.
Permanent establishment
Article 5 the Rijkswet provides very extensive regulations regarding the situations in which the activities of a company undertaken in the other country constitute a permanent establishment or not.
Article 7, Paragraph 3 (“Winst uit onderneming”) contains a so-called appropriate adjustment clause that applies to profits attributable to a permanent establishment (if the country having to make such an appropriate adjustment agrees with the adjustment made by the other country).
Income from immovable property
Article 6, Paragraph 1 of the Rijkswet (“Inkomsten uit onroerende zaken”) arranges that income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.
Article 13, Pargaraph 1 of the Rijkswet (“Vermogesnswinsten”) subsequently arranges that gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.
Associated enterprises
Article 9, Paragraph 2 of the Rijkswet (“Gelieerde ondernemingen“) contains a so-called appropriate adjustment clause (if the country having to make such an appropriate adjustment feels such adjustment is justified).
Dividends
Paragraph 2 of Article 10 of the Rijkswet (“Dividenden”) maximizes the dividend withholding tax that a Source State is allowed to withhold over dividend distributions to 15 per cent of the gross amount of the dividends if the beneficial owner is a resident of the other country.
Paragraph 3 of Article 10 subsequently arranges that in certain situations the Source State is not allowed to withhold dividend withholding taxes over a dividend distributions. One of the situations mentioned in Paragraph 3 is the situation in which a qualifying entity, which capital is fully or partially divided in shares, and which is a resident of the other country holds directly at least 10 per cent of the capital of the company paying the dividends. What conditions an entity should meet to qualify as a qualifying entity is determined in Paragraph 4 of Article 10.
Another situation in which the source state is not allowed to withhold dividend withholding taxes is the situation in which the beneficial owner of the dividends is a pension fund.
Article 10, Paragraph 8 of the Rijkswet arranges that a Source State is not allowed to withhold withholding taxes over a dividend distribution if the beneficial owner is an entity, which capital is fully or partially divided in shares, which is a resident of the other country and which is for at least 50 per cent directly or indirectly owned by individuals which are residents of either of the two countries if that entity owns at least 10 per cent of the capital of the entity that is making the dividend distribution.
Interest
Article 11 of the Rijkswet (“Rente”) arranges that, subjected to the provisions of Article 33 of the Belastingregeling (“EU savings Directive”), the source state is not allowed to withhold withholding taxes over interest payments if the beneficial owner of the interest is a resident of the other country.
Royalties
Article 12 of the Rijkswet (“Royalty’s”) arranges that the source state is not allowed to withhold withholding taxes over royalties if the beneficial owner of the interest is a resident of the other country.
Other
The Rijkswet furthermore includes an article arranging for a Mutual Agreement Procedure (Article 24 of the Rijkswet), an article on the Exchange of Information (Article 25 of the Rijkswet) and an article regarding the assistance with respect to the Assistance in the Collection of Taxes (Article 26 of the Rijkswet).
Furthermore Article 28 of the Rijkswet contains regulations regarding a residence fiction with respect to the Dutch inheritance and gift tax.
The Rijkswet also contains several transitional arrangements.
Click here to be forwarded to the Rijkswet van 23 december 2015, houdende regeling voor Nederland en Sint Maarten tot het vermijden van dubbele belasting en het voorkomen van het ontgaan van belasting met betrekking tot belastingen naar het inkomen en een woonplaatsfictie ter zake van erf-en schenkbelasting (Belastingregeling Nederland Sint Maarten), as available on the website of Staatsblad van het Koninkrijk der Nederlanden (the Rjkswet is only available in the Dutch language).
Are you looking for an other DTA? Then check our section DTAs & TIEAs, a very efficient way to locate numerous DTAs.
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