On June 20, 2016 the Dutch Government opened a consultation on proposed amendments to the interest limitation rules as included in the Articles 15ad and 10a of the Dutch corporate income tax Act. According to an announcement made in this respect, it is the Dutch Government’s intention to include these changes in the package Belastingplan 2017 (Tax Plan 2017) and to have the new regulations to enter into force on January 1, 2017. The aim of the amendments is to have the existing anti-abuse legislation to apply in more different situations. The consultation will run from June 20, 2016 through July 18, 2016.

The aim of the amendments is to make the regulations that limit the interest can be deducted by takeover holdings more solid/abuse proof. In a nutshell the purpose of the existing regulations is to limit the amount of interest due by holding companies on takeover financings that can be set of against the profits of the Target(s) when the Holding Company and the Target are members of the same fiscal unity. Before the introduction of the anti-abuse legislation in January 1, 2012, purchasers of (a group) of (a) Dutch Target(s) often incorporated a Dutch Holding company. This Holding Company was then partly financed via loans, which it used to purchase the Target(s). After the purchase, the newly incorporated Holding Company and the Target(s) then formed a fiscal unity for Dutch corporate income tax purposes. Since the Holding Company and the Target(s) are then treated as one single taxpayer, the interest that was due by the Holding Company over the takeover loan could be set off against the operational income realized by the Target(s). Thus resulting in less tax being due by the combination than as would be the case if Holding Company and the Target(s) were not included in the same fiscal unity. In order to combat this ‘base erosion’, as per January 1, 2012 anti-abuse legislation was introduced in the Dutch corporate income tax Act.

The amendments that are currently being proposed, and for which the Dutch Government opened a consultation, are intended to make the already existing anti-abuse regulations more solid.

Click here to be forwarded to the webpage where more information regarding the consultation and the draft law proposal can be found (available only in Dutch).

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