On May 9, 2018 the Kingdom of the Netherlands and the Kingdom of Denmark concluded a Protocol amending the Convention between the Kingdom of the Netherlands and the Kingdom of Denmark for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, which was concluded on July 1, 1996 (Hereafter: the Protocol). On May 28, 2018 a second reissue of the text of the Protocol was published on the website of the Tractatenblad.
Although the Protocol has been signed, it has not entered into force yet. For the Protocol to enter into force, the respective ratification procedures have to have been finalized in both countries.
Below we will discuss a selection of provisions included in the Protocol of which we think they might interest our readers.
Article I of the Protocol a.o. arranges that the title of the Convention is amended to the following title: “Convention between the Kingdom of the Netherlands and the Kingdom of Denmark for the elimination of double taxation with respect to taxes on income and the prevention of tax evasion and avoidance”.
Article I of the Protocol furthermore arranges that the Preamble of the Convention is amended as follows:
“The Kingdom of the Netherlands
the Kingdom of Denmark,
Desiring to further develop their economic relationship and to enhance their cooperation in tax matters,
Intending to conclude a Convention for the elimination of double taxation with respect to taxes on income without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in this Convention for the indirect benefit of residents of third Jurisdictions),
Have agreed as follows:”
Article II of the Protocol arranges that the list of existing taxes to which the Convention shall apply in particular as included in Article 2, Paragraph 3 of the Convention is amended in such way that it reads as follows::
“The existing taxes to which the Convention shall apply are in particular:
a) in Denmark:
(i) the income tax to the State (indkomstskatten til staten);
(ii) the income tax to the municipalities (den kommunale indkomstskat);
(hereinafter referred to as “Danish tax”);
b) in the Netherlands:
(i) the income tax (de inkomstenbelasting);
(ii) the wages tax (de loonbelasting);
(iii) the company tax (de vennootschapsbelasting) including the Government share in the net profits of the exploitation of natural resources levied pursuant to the Mining Act (de Mijnbouwwet);
(iv) the dividend tax (de dividendbelasting);
(hereinafter referred to as “Netherlands tax”).”
The Protocol arranges that a new Article 23a (“Entitlement to Benefits”) will be included in the Convention. This new Article 23a contains an anti-abuse provision (the so-called Principal Purpose Test).
Exchange of information
The Protocol arranges that Article 27 (“Exchange of information”) of the Convention is replaced by a new much more extensive article containing provisions regarding the exchange of information.
Assistance in the collection of taxes
The Protocol arranges that the existing Article 28 (“Assistance in recovery”) is replaced by a new Article 28 containing provisions regarding the assistance in the collection of taxes.
The Protocol also arranges that Article 29 (“Limitation of Articles 27 and 28”) shall be deleted from the Convention.
Click here to be forwarded to the second reissued text of the Protocol as published on the website of the Tractatenblad of May 28, 2018.
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