Proposed Dutch tax changes to Dutch acquisition financing
For acquisitions of Dutch companies, often a Dutch SPV is set up in order to acquire the shares of the Dutch target company. The profits of the Dutch target company can be set off against the finance expenses of the Dutch SPV after the formation of a Dutch fiscal unity.
Since 2012 rules have been introduced to limit that the interest expenses of the Dutch SPV can be set off against the results of Dutch Target. In the Budget Plan for 2017, the Dutch government has introduced new measures to curb the interest deduction in following situations:
- Pushing down the debt of the SPV to the level of the Dutch target
- Abuse of the safe harbor rule that provides in deduction of interest if no more than 60% is financed with debt. This safe harbor % is gradually reduced in time from 60% down to 25% in a period of 8 years. In practice taxpayers were able to ‘restart’ this period resulting in a higher deduction of interest expenses
- Roll over of the grandfathering rules to new fiscal unities. Situations prior to November 15th, 2011 were not hit by the rules that were introduced in 2012. If these ‘old’ fiscal unity groups were acquired by a new Dutch parent company, the same grand fathering rules were available for this new parent company. That is no longer possible after January 1, 2017
Careful tax structuring of a Dutch acquisition remains of essence. Still various safe harbor rules are available. Furthermore, it is important that interest deduction limitation do not result in overkill (no interest deduction in any country). Furthermore, various changes are implemented and other changes or coming. One of the most important changes is the implementation of the EU anti-tax avoidance directive (ATAD). Therefore we also recommend that companies review their existing acquisition structures to make sure it is still effective.
If you have questions or comments, please contact Guido van Asperen (email@example.com or +31 615041623).back to overview