By decree dated November 3, 2015 (published on November 11, 2015) the Deputy Minister of Finance followed-up on the previously announced approval given for the period within which advanced tax rulings (ATRs) can be modified due to the fact that, as a result of expected adoption of the Parent-Subsidiary Amendment (Implementation) Act 2015 by the Lower House, they would lose their validity.
This concerns ATRs on the absence of:
- a foreign corporate income tax liability in respect of the holding of a substantial interest in an entity resident in the Netherlands; and/or
- a dividend withholding tax obligation for cooperatives.
Due to the absence of transitional rules, as of January 1, 2016 it will be necessary, in certain situations, for the foreign entity or direct member performing a linking function to possess sufficient substance.
If, in those situations, the new substance requirements are not met on January 1, 2016, the resolutive condition contained in the ATR will, in principle, take effect. The resolutive condition stipulates that, in the event of a relevant amendment of the law, the ATR will immediately and fully cease to apply.
The decree of November 3, 2015 grants, for reasons of efficiency, approval to suspend the resolutive condition if the following conditions are met:
- Taxpayers report to the APA/ATR team of the Dutch Tax and Customs Administration/Large Enterprises Division (Rotterdam office) in writing before January 1, 2016.
- Taxpayers state their intention to comply with the substance requirements before April 1, 2016.
- Taxpayers also state that they acknowledge that the ATR will cease to apply on January 1, 2016 if the substance requirements are not met before April 1, 2016.
- Taxpayers must notify the APA/ATR team of the Dutch Tax and Customs Administration/Large Enterprises Division (Rotterdam office) before May 1, 2016 whether the substance requirements have been met.
The decree also states that as there is no provision for transitional rules, dividend distributions from or disposals of the substantial interest or the proceeds from the membership rights in the cooperative during the period between January 1, 2016 and the date on which the substance requirements are met, will be subject to tax with due observance of the applicable treaty provisions. The approval therefore explicitly only accomplishes that ATRs will not immediately cease to apply on January 1, 2016.