On 20 September 2016, the Tax Plan 2017 was presented by the Minister of Finance to the lower house of the parliament. The most important proposals regarding corporate income tax and dividend withholding tax, which unless otherwise indicated will apply from 1 January 2017.

Innovation box: As part of the Base Erosion and Profit Shifting (BEPS) project of the OECD and G20, the innovation box regime provisions are amended to implement the “nexus approach”. In addition, requirements are imposed regarding the access criteria for developed technical innovations.

The nexus approach is implemented as an additional substance criterion. This stricter substance requirement is intended to prevent companies without a substantial economic presence in the Netherlands, or without innovative activities carried out in the Netherlands, benefitting from the innovation box regime.

Corporate tax rate: The first tax bracket of 20% corporate income tax will gradually be extended as follows:

• in 2018: from EUR 200,000 to EUR 250,000;
• in 2020: from EUR 250,000 to EUR 300,000; and
• in 2021: from EUR 300,000 to EUR 350,000.

Interest deduction limitations: The term “collaborative group” is introduced in the anti-base erosion provision. Under this provision, interest paid to a related party is, in principle, not deductible if the loan was attracted in connection with a “tainted” transaction. The definition of a “related party” is now expanded to also include a company that is part of a collaborative group of companies holding a total combined interest of at least one third in a Dutch company.

Withholding tax refund procedure: The Tax Plan 2017 introduces new dividend withholding tax refund provisions. Upon request and under certain conditions, non-resident shareholders who qualify as a beneficial owner of income not subject to corporate income tax in the Netherlands may request a refund of dividend withholding tax withheld insofar the tax levied is higher than the corporate income tax which would have been due if they were resident or established in the Netherlands.

Control: As per the tax budget proposal for fiscal year 2017 issued by the Dutch Ministry of Finance, A party is considered a “related party” – among others – if an entity has at least one third interest in the Dutch party or is (in) directly owned at least one third by an entity that (in) directly owns at least one third interest in the Dutch party.