On December 18, 2018 the Dutch Eerste Kamer (the Dutch Senate) adopted the Belastingplan (tax regulations) for 2019. Below we will provide you with an overview of a selection of some important changes to the Dutch tax regulations.
Corporate income rate
As per January 1, 2019 the corporate income rate applying to the first bracket (applying to the first EUR 200.000 of taxable income) is lowered from 20% to 19%. The higher rate remains 25%.
Tax losses to be carried forward
The period during which tax losses can be carried forward will be shortened from 9 to 6 (financial) years. Loss from the tax years 2018 and earlier can still be carried forward for 9 (financial) years (a loss from 2018 can be carried forward to the financial years upto and including 2027). Tax losses from 2019 can be carried forward to the financial years upto and including 2025.
Depreciation of real estate
The depreciation of real estate that is used within the own company will be further limited. Under the current rules such real estate can be depreciated to 50% of the so-called WOZ value. As of 2019 the depreciation is limited to 100% of the so-called WOZ value for Dutch corporate income tax purposes.
Special rules apply to buildings that have been put to use before January 1, 2019, but for which not yet depreciation costs have been taken into account for 3 full financial years.
An additional Controlled Foreign Company (CFC) measure is introduced. This additional anti-abuse provision that should prevent companies from evading tax by shifting profits to a CFC in a low-tax country. The supplementary CFC measure is applicable from January 1, 2019 and arranges that the profit of the CFC, which does not exercise any substantial economic activity, is taxed at the level of the Dutch taxpayer. A low-tax country is a country that:
· does not have a profit tax or that has a profit tax with a nominal rate of less than 9%; or
· a country is on the European Union's list of non-cooperative jurisdictions for tax purposes.
Elimination of the deductibility of costs for additional tier-1 capital
As per January 1, 2019 the remuneration that banks and insurance companies pay on convertible bonds (CoCos) is no longer tax deductible for Dutch corporate income tax purposes.
Interest limitation rule
As per January 1, 2019, the Netherlands will implement the first European Anti-Tax Avoidance Directive (ATAD). As a consequence borrowing costs shall be deductible in the tax period in which they are incurred only up to 30 percent of the taxpayer's earnings before interest, tax, depreciation and amortisation (EBITDA). If these borrowing costs however are less than EUR 1 million, the borrowing costs are fully deductible.
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