On January 24, 2019, the Court of Justice of the European Union (‘CJEU’) rendered its judgment in the Morgan Stanley & Co International plc (‘Morgan Stanley’) case (case no. C-165/17). This case concerns the VAT recovery of costs incurred by a fixed establishment that are also used for the turnover of a foreign head office.
On February 12, 2019 the Dutch Lower House of Parliament passed the Bill for the ratification of the Multilateral Convention (“MLI”) to Implement Tax Treaty-Related Measures to Prevent Base Erosion and Profit Shifting (BEPS) and improve dispute resolution mechanisms. Noteworthy is that the Lower House also agreed to change the MLI position of the Netherlands with respect to preventing the artificial avoidance of permanent establishment status.
On February 12, 2019, the bill on the Fiscal Unity Emergency Repair Act (Wet spoedreparatie fiscale eenheid) was adopted by the Lower House. This bill was explained in our previous memoranda dated June 7, 2018 and November 6, 2018. The emergency repair measures mean that for a number of legal provisions the approach to be taken is as if a fiscal unity for corporate income tax purposes does not exist. As previously reported, this bill – after amendments to the original bill – has retroactive effect on most points to January 1, 2018.
On March 4, 2019 an internet consultation on the draft bill on the Excessive Borrowing from Own Companies Act was launched. This bill had been announced in September last year on Budget Day (see section 3.1 of our previous memorandum).
On February 26, 2019, the Court of Justice of the European Union (CJEU) rendered two landmark decisions on the interpretation of the beneficial owner concept in cases where the Interest and Royalties Directive (joined cases N Luxembourg, X Denmark, C Danmark and Z Denmark) and the Parent-Subsidiary Directive (joined cases T Danmark and Y Denmark) apply.
The consultation document on the bill on the Modernization of Partnerships (‘Bill') was published on February 21, 2019. The current legislation on partnerships dates from the 19th century and, according to the government, no longer meet the needs of today’s users.
On March 8, 2019, the Deputy Minister of Finance sent a draft decree with transitional tax rules in connection with Brexit to the Lower House of the Dutch Parliament. The draft decree must provide for transitional rules with regard to a number of (elements of) Dutch tax laws in the event of a withdrawal of the United Kingdom (UK) from the European Union (EU) without a withdrawal agreement (no-deal Brexit).
In anticipation of a possible ‘no-deal’ Brexit, the Deputy Minister of Justice and Safety has published withdrawal rules for citizens of the United Kingdom and their family members who lawfully reside in the Netherlands on March 29, 2019. These provide for transitional rules applying until June 30, 2020, followed by final rules.
A ‘Taxing the digital economy’ roundtable session recently took place at KPMG Meijburg & Co in Amstelveen; a successful and interactive session with interesting results. The most important conclusion is that, in addition to online technology companies, more traditional multinationals could also be affected by the potential tax measures of the Organisation for Economic Cooperation and Development (OECD)
On March 18, 2019 the Dutch government launched an internet consultation offering interested parties the opportunity to respond to the draft bill that introduces the thin cap rule for banks and insurers. The internet consultation closes on April 15, 2019. If approval is granted, the responses will be published during the course of the consultation. The bill is discussed below.