Since a longer period so called BEPS – Base Erosion and Profit Shifting is on the EU agenda. Recently the Dutch Government has replied to the developments surrounding the BEPS. For most the Dutch Government is of the opinion that BEPS should be tackled EU wide, not by individual states. However some new measures have been introduced by the Dutch authorities to increase the Dutch substance for tax purposes. These measures mainly focus on Dutch (service) companies with the following activities: Intra-Group Finance, Licensing and Leasing. In case these companies wish to make use of the Dutch Tax Treaty network and/or EU Directives, they have to meet these substance criteria when the activities form a major part (70% or more) of their regular business.
(i) At least half of the total number of statutory board members and board members with
power of decision resides or is actually established in the Netherlands .
(ii) Board members residing or established in the Netherlands have the required professional
knowledge to properly perform their duties. The duties of the board include in any case
the decision-making on transactions to be entered into by the Service Company – on the
basis of the own responsibility of the Service Company and within the ordinary course of
group involvement – and a proper handling of the transactions entered into.
(iii) The Service Company avails of qualified employees for proper implementation and
registration of the transactions to be entered into by it.
(iv) The management decisions are taken in the Netherlands.
(v) The main bank accounts of the Service Company are held in the Netherlands.
(vi) The bookkeeping of the Service Company is conducted in the Netherlands.
(vii) The business address of the Service Company is in the Netherlands.
(viii) The Service Company is – to the best of its knowledge – not considered a resident for tax
purposes in another country than the Netherlands.
(ix) The Service Company runs real risk in connection with the loans and legal relationships
and the related loans and legal relationships underlying the received and paid interest,
royalties, lease and/or rent payments.
(x) The Service Company has at least an equity amount appropriate with regard to the
required real risk.
Especially the two last criteria can be difficult to meet for smaller service companies.
Please feel free to contact us for the set up and annual compliance of service companies, we act as a one stop shop as we work with all necessary parties; Notaries, Accountants and Transfer Pricing Specialists.
