On 11 November 2015 the Dutch State Secretary of Finance published a decree regarding existing advanced tax rulings (ATR) that may no longer be valid after 1 January 2016 because of the proposed changes to Dutch tax law dealing with the implementation of the new anti-abuse provisions of the EU Parent Subsidiary Directive. If certain conditions are met, the Decree approves an additional transition period of three (3) months, i.e., up to 1 April 2016, allowing taxpayers to meet the new Dutch tax law requirements.
The Dutch Minister of Finance submitted the 2016 budget proposal to the lower house of parliament on 15 September 2015. This legislative proposal included, amongst others, an amendment of the Dutch non resident taxation rules and the Dutch dividend withholding tax rules for cooperatives, which new rules should apply as of 1 January 2016. These specific proposals were introduced to implement an anti-hybrid mismatch provision and a common minimum anti-abuse rule in Dutch law, following their introduction in the EU Parent Subsidiary Directive in 2014 and 2015, respectively. As a result of these proposed changes, a non-resident entity may need to meet the Dutch minimum substance requirements provided by article 8a of Decree No. DGB 2014/3099 in its country of residence (the New Requirement) if it either (i) has a substantial interest in a Dutch-resident entity (generally an interest of 5% or more) or (ii) is a member of a Dutch-resident cooperative.
As a consequence of the envisaged introduction of the New Requirement, any ATR that deals with the application of the Dutch non-resident taxation rules and/or the Dutch dividend withholding tax rules for cooperatives is terminated with immediate effect as per 1 January 2016 if, amongst others, the respective non-Dutch entities owning qualifying shares or membership rights are not in compliance with the New Requirement in their country of residence. This is possible because, in principle, all ATRs include a clause on immediate termination in cases of relevant changes of law.
Transitional period granted
In the Decree, the Dutch State Secretary of Finance grants a transition period of three months (by suspending the terminating clause until 1 April 2016) in order for relevant non-Dutch entities to meet the New Requirement in their country of residence. This transition period is granted for efficiency purposes and only under the conditions that interested parties:
- register themselves with the APA/ATR-team of the Dutch tax authorities before 1 January 2016.
- declare that they intent to comply with the New Requirement before 1 April 2016.
- declare that they acknowledge that the respective ATR is terminated as of 1 January 2016 if the New Requirement is not met before 1 April 2016.
- adequately inform the APA/ATR-team of the Dutch tax authorities before 1 May 2016 if the New Requirement is met.
On a final note, the Dutch State Secretary of Finance confirms that (i) any dividend distributions made in connection with a substantial interest, (ii) capital gains realised on the sale of a substantial interest in a Dutch entity, or (iii) any income received in connection with the membership in a Dutch cooperative remain subject to Dutch taxation (taking into account any tax treaty provisions that may apply). The proposed transitional period does not protect such distribution, gain or income from Dutch taxation during the period between 1 January 2016 and the moment that the New Requirement is met.