On December 28, 2018 the Dutch Government published its lis of low-tax jurisdictions. The list consists out of the 5 jurisdictions that are currently on the EU list of non-cooperative jurisdictions for tax purposes and 16 other jurisdictions that Dutch Government considers to be low-tax jurisdictions. These latter are either jurisdictions that do not tax profits, or jurisdictions that do tax profits but that do so against a nominal rate that is lower than 9%.
The list will be used in relation to three Dutch measures to combat tax avoidance.
The new CFC regulations
First the list will be used for the additional measure on controlled foreign companies (CFCs), which will come into effect on January 1, 2019. A high-level summary of these new Dutch CFC regulations can be found in our article: “A selection of important tax changes in the Netherlands” from December 23, 2018.
The implementation of a conditional withholding tax for interest and royalties
Secondly the list will also be used to implement a conditional withholding tax on interest and royalties from January 1, 2021. This means that companies registered in the jurisdictions on the Dutch list will pay 20.5% tax from 2021 on interest and royalties received from the Netherlands. This will prevent funds being channelled to tax havens through the Netherlands
The Dutch ruling practice
Thirdly, the Dutch Tax and Customs Administration will no longer issue rulings on transactions with companies headquartered in jurisdictions on the list.
The 21 jurisdictions on the Dutch list of low-tax jurisdictions are:
· American Samoa;
· The Bahamas;
· The British Virgin Islands;
· The Isle of Man;
· The Cayman Islands;
· Saudi Arabia;
· Trinidad and Tobago;
· The Turks and Caicos Islands;
· The United Arab Emirates; and
· The US Virgin Islands;
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