New Legislation

The 'joint ownership of property' principle that applied to any marriage enacted prior to January 1st 2018 declared that all assets and debts would be automatically shared by both partners of the marriage. The new legislation changes this. Now, after a marriage has been enacted, the following items fall outside the joint ownership of property principle:

• Commercial enterprises that either partner owned prior to the marriage
• Gifts or inheritances that either partner receives during the marriage

Shareholder directors are not required to declare their commercial interests

This new legislation has significant consequences for shareholder directors. If the company ownership or shares were registered prior to the date of marriage, these assets shall remain the sole property of that partner and need not be shared with the other. Different rules and conditions apply to this. Shareholder directors should seek expert advice before making their marriage vows. 

Questions regarding this new legislation and how it affects marriage should be directed to our Private Client Services advisors.

What value?

The bitcoin’s value fluctuates enormously. Fluctuations of dozens of percent per day are no exception. For your income tax return, however, only the value on the reference date of box 3 is important. For the coming return for 2017, this is the rate on 1 January 2017. This was around €950 (for the exact value, please contact your stockbroker). The fact that the current value is many times higher is only important for your 2018 return.

Please note! Bitcoin transactions are in principle anonymous. However, you are obliged to declare your possession of them. If you fail to do so and the tax inspector discovers your possession of bitcoins, an additional assessment will be imposed on you plus a hefty fine.

Checks on possession

The probability that the Tax and Customs Administration will trace your possession is by no means small because the tax authority has a whole range of control methods at its disposal. For instance, in almost all cases you will pay for your purchase of bitcoins through a bank. In the Netherlands, banks are required to give the tax authority access to transactions like these. And there are also agreements about this with foreign banks.

Purchases of a considerable sum

Additionally, the tax authority has insight into purchases of a considerable sum. So if, for example you spend part of your bitcoins profit on a new car, the tax authority can ask you to explain how you financed it. If undeclared income or hidden assets, like bitcoins, is suspected, you can also be sent an additional assessment and be fined.

New withholding tax obligation for Dutch “holding cooperatives”

The Dutch government has announced that it intends to bring the treatment of Dutch cooperatives more in line with the treatment of Dutch NVs and BVs. In order to achieve this objective the Dutch government has proposed changes to bring certain Dutch cooperatives under the scope of the Dutch dividend withholding tax rules if both of the following conditions are met:

1. the cooperative is a “holding cooperative” if its actual activities in the year preceding the profit distribution consisted primarily (i.e., for 70 percent or more) of the holding of participations or the direct or indirect financing of related entities or individuals, and
2. the members of the cooperative have “qualifying membership rights”. In assessing whether there is a qualifying membership right, the membership rights of a member and the entities and individuals related to that member will be taken into account.

Non-holding or “real” cooperatives (cooperatives running a business enterprise and/or with a large group of members) will remain exempt from dividend withholding tax.

Broadened Dutch dividend withholding tax exemption

In conjunction with the new withholding tax obligation that would apply to Dutch “holding cooperatives”, the consultation document also includes a proposal to broaden the scope of the domestic dividend withholding tax exemption. The exemption would apply to distributions made by BVs/NVs and holding cooperatives (“Dutch entities”) to parent companies that are tax resident in the EU/European Economic Area or in a third country that has concluded a tax treaty with the Netherlands. In both instances, the interest in the Dutch entity would have to be an interest that would qualify for the Dutch participation exemption or participation credit if the recipient were resident in the Netherlands.

New Anti-abuse rule

It should be noted that the proposed expanded exemption will be subject to a new anti-abuse rule. The dividend withholding tax exemption will not apply if, cumulatively:

1. the shares, or in the case of a cooperative, the membership rights, are held with the main purpose, or one of the main purposes, to avoid Dutch dividend withholding tax by another individual or entity, and
2. the holding of the shares or membership rights is part of an artificial arrangement or transaction, which will be the case if there are no valid business reasons reflecting economic reality.

What to do?

If the proposed measures are adopted, they will likely apply as from January 1, 2018. Thus, potentially affected taxpayers should assess the effect of the proposed changes, which could be beneficial given the broadened exemption but also could be detrimental given that holding cooperatives are now within the scope of Dutch dividend withholding tax and of the anti-abuse rule (which will also be applicable to BVs/NVs).

Feel free to contact us in case you want to receive information about the proposed changes in the Dutch dividend withholding tax, or if you need advice on your specific situation.

Maximum is raised

Previous, the penalty for not filing the Country-by-Country Report was EUR 20.500. After the passing of the new bill this penalty is raised to a maximum of EUR 820.000.  Also non-filling of the notification by a local group entity within the statutory deadline can be penalized up to the amount of EUR 820.000. The maximum  amount can be imposed after multiple violations.

Multinationals

Multinational companies with an ultimate parent (the "Ultimate Parent Entity") that is tax resident in the Netherlands with an annual consolidated group revenue of at least EUR 750 million are required to submit a Country-by-Country Report with the Dutch tax authorities. The Country-by-Country Report contains an overview per country of aggregate information relating to the amount of revenue, profit (or loss) before income tax, income tax paid, number of employees, etc.

Also the tax jurisdiction of each group entity (the "Constituent Entity") and the nature of the main activities of each Constituent Entity needs to be provided. By the exchange of such information between the different tax authorities, the multinational companies will have less opportunities to avoid taxes.

Information required

Group entities which are a tax resident in the Netherlands, and are part of an multinational company with a minimum consolidated group revenue of EUR 750 million must notify the Dutch tax authorities. The following information is generally required in notification forms regarding local group entities on behalf of which a Country-by-Country report has been or will be filed:

1. name of the reporting entity;
2. address;
3. tax identification number; and
4. fiscal year covered.

Is your company able to produce a Country-by-Country Report today? Do you have the information you need to comply with Country-by-Country Reporting? Are the required data aggregation processes up to speed? To avoid a penalty these questions need to be answered positively.

Feel free to contact us in case you want to receive information about Country-by-Country Reporting, or if you need advice on your specific situation.