The plans for the coming year were officially announced on Prince’s Day. Mazars created a list of the most important (fiscal) proposals from the 2020 tax package for you. What’s changing for you?
Withholding tax on interest and royalties
A withholding tax on outbound interest and royalty payments to a low-tax country will be introduced on 1 January 2021. It is proposed that withholding tax should apply only to interest and royalty payments made to affiliated bodies. However, they must be affiliated parties, i.e. parties which are connected in such a way that the activities of one body can be determined by the other. In any case, this is true if more than 50% of the statutory voting rights are represented. The withholding tax will also apply in various abuse situations. The rate is as high as the highest corporate tax rate.
Clarification of the concept of a permanent establishment
The presence of a permanent establishment (e.g. a branch) is one of the points of departure for a state to proceed with the taxation of a company or entrepreneur not established in that state. It is proposed that the definition of the term 'permanent establishment' should in future be aligned with the definition in the applicable tax treaty. This prevents there from being no permanent establishment on the basis of national law, whereas the right to levy taxes under a tax treaty does accrue to the Netherlands. In non-treaty situations, the inclusion of the definition in national legislation brings it into line with the latest version of the OECD Model Convention and related international anti-abuse measures in the framework of the OECD BEPS project.
Revision of earnings stripping measure
The legislator proposes that the inspector should be able to revise an order issued with regard to the balance of interest to be carried forward in the event of a new fact, bad faith or an error reasonably recognisable to the taxpayer. The same period will apply as for the recovery of undertaxed tax. In addition, the inspector may issue a decision if the accrued balance of interest from a previous year is deducted in determining the profit for a year.
Want to know more?
Would you like to know more about the 2020 Tax Plan, the proposed changes and what this means for you? If so, please contact us via email or by phone: +31 (0)88 277 15 00. We would be happy to assist you.