On 18 December 2013 and 12 June 2014, the Dutch Ministry of Finance published various new Decrees to address the perceived improper use of Dutch tax treaties and tax law by financial service companies (FSCs). Through these publications, the Dutch government seeks to demonstrate that it is contributing to actions addressing undesired international tax planning by multinational companies (see also the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) report “Prevent Treaty Abuse”).
With the publication of the various new Decrees, the Dutch Ministry of Finance re-emphasises its existing policy in relation to FSCs while, at the same time, showing commitment to monitor and police the appropriate application of the legislation. Although the substance requirements for FSCs have not changed significantly, it is clear that the Dutch Tax Office is now more actively policing FSCs on the correct fulfilment of these requirements.
As the new Decrees do not make significant changes on the substance requirements for FSCs (from those set out in the previous 2004 Decrees), they do not hinder the overall attractiveness of the Netherlands for investors — but rather ensure the continued suitability of the Netherlands as a location for FSCs.
In this Tax Insight, we discuss the Decrees, the commitment to monitor and police FSCs, as well as the relevant substance requirements in further detail. We also include a list of typical documents to review and questions to ask when testing compliance of an FSC.