From 1 January 2014, a new Decree entered into force which codifies the existing administrative guidance on substance requirements for companies engaged in inter company financing and/or licensing activities.
Now, Dutch companies that claim the benefits of a tax treaty or EU Directive (treaty benefits) will have to declare in their annual Dutch corporate income tax return whether or not the tax payer meets a defined set of substance requirements.
The substance requirements to be met by these companies are similar to the substance requirements already applicable since 2001 for Dutch companies electing to obtain certainty in advance from the Dutch tax authorities in the form of an Advance Pricing Agreement (APA) or an Advance Tax Ruling (ATR).
The new rules will be applicable for fiscal years starting as of 1 January 2014 and the substance requirements should be met on a continuous basis. Most taxpayers are already familiar with these rules since compliance with these rules is already required under the existing ruling practice and is also considered best practice for non-ruling entities.
