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Tax

Law Firm in the Netherlands specialised in Tax

As local and international tax regulations become more prescriptive, dealing with them in a cross-border context presents you with a significant challenge. The number and complexity of tax investigations conducted by authorities is rapidly escalating and the need for tax adjustments is rising accordingly. Our 350 tax lawyers are supported by strong technical tax intelligence teams that identify developments in tax law and policy affecting your business. This multi-disciplinary approach helps you develop robust structures that maximise tax effectiveness in alignment with your commercial strategy.

Whether you are a financial institution, multinational, fund, investor or high net worth individual, we understand your business and the tax pressures you face. Our teams work together across Europe and beyond in the key areas affecting your business including VAT, international taxation, transfer pricing, e-commerce, M&A and investment funds, tax planning and financing. In case of, for example, a takeover or financing transaction, it is very important to identify all relevant tax aspects as early as possible. By doing so, they can be taken into account in the negotiations.

Our experts can help you manage tax control cases and deal with tax authorities as well as manage tax litigation cases. The right tax advice can make a material difference to transaction costs and, in some cases, avert serious consequences. When discussions with the tax authorities arise, going to court is a possibility, but often negotiations are a good alternative. They can lead to an acceptable compromise.

"The CMS tax team is very experienced, responsive and pragmatic. They understand our business and the tax pressure we face."

The Legal 500 EMEA, 2024

"High quality, fast, pragmatic tax advice. Commercial insight excels compared to more academic firms and approaches."

The Legal 500 EMEA, 2024

"Great teamwork with a proactive approach."

The Legal 500 EMEA, 2024

"High level of professionalism and a deep understanding of the client’s needs and market standards."

The Legal 500 EMEA, 2024

"I get what I want and I get it quickly, and the advice is on the ball."

Chambers Europe, 2024

"It is a very knowledgeable team."

Chambers Europe, 2024

"We have the good feeling that if CMS brings your attention to a detail, you really see that that detail was important."

Chambers Europe, 2024

"The CMS tax team is very responsive, pragmatic and prompt."

Chambers Europe, 2024

"The team is always there for me."

Chambers Europe, 2024

"Their tax advice is responsive, pragmatic and prompt."

Chambers Europe, 2023

"An experienced and pragmatic team, willing and able to tailor their services to clients’ needs."

The Legal 500 EMEA, 2022

"The CMS tax team has very broad experience and is technically excellent, efficient and responsive."

The Legal 500 EMEA, 2022

The team is technically strong and super-responsive.

The Legal 500 EMEA, 2021

The firm's international outlook is "very in tune with other locations and cross-border arrangements."

Chambers Europe 2021

Clients highlight the lawyers' "technical know-how and the fact that it is always possible to fall back on other specialists in the firm when there are tangential issues."

Chambers Europe, 2020

Sources further appreciate that the lawyers "answer questions quickly and precisely".

Chambers Europe, 2020

"Co-operative, creative, proactive and to-the-point."

Chambers Europe, 2019

Choose an area

Corporate Tax
Tax aspects relating to such matters as mergers and takeovers, private equity, employee participation plans and structured finance, form an important
International Tax
Sound tax advice is absolutely essential where international mergers and takeovers, private equity, international tax planning and transfer pricing ar
Real Estate Taxation
With property transactions and property developments, active support with tax matters is extremely important. By identifying and solving tax pitfalls
Tax Litigation
The global tax landscape has undergone radical change in recent years and is constantly evolving. In light of increasing pressure to tackle perceived
VAT
If you engage in business activities in the Netherlands or in other EU member states, you will probably have to pay VAT on your turnover. But even if
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18/08/2022
CMS Tax Global Brochure
Over the past two years, enterprises, governments and citizens have grappled with unparalleled technological evolution and new business models, as well as significant tax reforms, regulatory changes...

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13/03/2024
Crypto Tax Legislation & Law in the Netherlands
1. Is there a specific legislation issued for the taxation of crypto-assets or do general national tax law principles apply because the tax legislator has not regulated this so far? In the Netherlands...
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27/12/2023
No white smoke on ATAD III proposal in 2023
As a reminder, on 22 December 2021, the European Commission issued its proposal for a directive to prevent the abuse of shell entities for tax purposes (ATAD III proposal). After several amendments, the...
24/11/2023
Carbon Border Adjustment Mechanism transition in effect since 1 October...
On 1 October 2023, a two-year transitional period began for implementation of Regulation (EU) 2023/956, which introduces the Carbon Border Adjustment Mechanism (CBAM). CBAM levies punitive CO2 charges...
04/10/2023
CMS advises Zien Group on the sale of the Hard Rock Hotel Amsterdam
CMS has advised Zien Group on the sale of the Hard Rock Hotel Amsterdam American to Dalata Hotel Group, Ireland's largest hotel operator. The 'American' is located on Leidseplein, has 173 guest rooms...
27/09/2023
DAC 8 Proposal approved by the European Parliament
BackgroundIn recent years, the crypto-asset landscape has steadily grown and has reshaped the world of payments and investments. Today such assets have an estimated market capitalization of USD 1.09 trillion...
20/09/2023
CMS advises Bynder on the acquisition of EMRAYS
CMS has advised Bynder, the market-leading digital asset management (DAM) platform on its acquisition of EMRAYS, a specialist provider of AI search solutions for DAM. The CMS team was led by Roman Tarlavski...
19/09/2023
Dutch 2024 Tax Plan and other Tax proposals
On Tuesday 19 September 2023 the Dutch State Secretary for Finance published the 2024 Tax Plan and related legislative tax proposals. This newsflash primarily discusses the proposals that we consider most relevant for (international) companies. Dividend stripping Dividend stripping is the practice of splitting the economic interest in and legal title to dividends in order to obtain a dividend withholding tax advantage. The 2024 Tax Plan proses to improve the possibilities to combat dividend stripping through the following two separate measures:The introduction of a record date for recording the beneficiary of the dividends and the underlying credits, refunds or reductions of dividend withholding tax; andImproving the burden of proof for tax authorities in cases of suspected dividend stripping. The later measures only apply if the underlying tax amount exceeds EUR 1,000. Dutch tax classification rules for (foreign) entities A new regime for the classification of (foreign) entities for Dutch tax purposes is proposed as of 2025. The regime aims at reducing (hybrid) mismatches between the Netherlands and other jurisdictions and will include the following key elements:the codification of the current tax classification method for foreign entities;the current tax classification method for foreign entities will be supplemented by the 'fixed'-method and the 'sym­met­ric­al'-meth­od for foreign entities that do not have a comparable Dutch legal form, whereby:the 'fixed'-method entails that if an entity established under foreign law is resides in the Netherlands, the entity will always be regarded as tax opaque; andthe ''sym­met­ric­al'-meth­od means that if an entity established under foreign law (with a shareholder relationship with a Dutch resident taxpayer) and that entity does not reside in the Netherlands, the Dutch qualification of the entity will follow the qualification of its country of residence; andthe so-called unanimous consent requirement (toes­tem­mingsvereiste) will be abolished and all Dutch limited partnerships (CV), including the open limited partnerships (open CV) that currently is regarded as tax opaque, will qualify as tax transparent (except for reverse hybrid structures). The change in the tax classification of the open CV from tax opaque to tax transparent will trigger a final settlement which may result in a tax liability. Facilities are proposed to allow for a tax neutral restructuring. The impact of this proposal needs to be assessed as soon as possible with a viewing to benefitting from the special restructuring facilities in 2024. Changes to the tax classification of Dutch mutual funds (fonds voor gemene rekening or FGR) Under the current rules, the FGR can be structured as tax transparent or tax opaque for Dutch tax purposes. An FGR qualifies as tax transparent it the rules relating to the transfer of units are structured according to:the unanimous consent variant –units are only transferable with the prior unanimous consent of all other unitholders. The redemption variant – units can only be redeemed and issued by the FGR, i.e. only be transferred to the fund itself. All other FGRs are currently treated as tax opaque for Dutch tax purposes. Under the proposed new rules, an FGR will only qualify as tax opaque for Dutch tax purposes if the FGR is regulated under the Dutch Financial Supervision Act and the participation units are freely transferable. In this respect, the units will not be considered freely transferable if the units can only be redeemed and issued by the FGR itself. All other FGR's will be treated as tax transparent as of 2025. The change in tax classification from tax opaque to tax transparent will trigger a deemed disposal of the assets and liabilities of the FGR which may result in a Dutch corporate income tax liability. In order to give taxpayers the opportunity to restructure in a tax neutral manner in preparation for the change in the tax classification of FGRs, several facilities are offered. We would advise FGRs that currently qualify as tax opaque and are affected by this proposal to take advantage of the restructuring opportunities in 2024 before the proposed changes take effect from 2025. VBI regime It is proposed that the Dutch exempt investment institution regime (VBI regime) will be limited to entities that are regulated under the Dutch Financial Supervision Act as of 2025. This will eliminate the current possibility of using this exempt regime for Dutch corporate income tax purposes for the investment in private assets. FBI regime It is proposed that Dutch fiscal investment institutions (FBI) will be prohibited from directly owning Dutch real estate. Any FBI directly owning Dutch real estate as of 2025 will be subject to corporate income tax. Any FBI affected by the change in legislation and wishing to avoid such tax obligations will have to complete a necessary restructuring in 2024. During this period, a real estate transfer tax exemption will be introduced for restructurings by FBI to divest any prohibited assets or subsidiaries. Real estate transfer tax on share deals / concurrence exemption From 2025 the so-called concurrence exemption for the acquisition of shares in a real estate company will be abolished (concurrence between VAT and real estate transfer tax). As a result, the indirect acquisition of newly developed real estate will be subject to real estate transfer tax at the new rate of 4%, calculated on the fair market value of the new building or buildings. However, the concurrence exemption remains available if during the first 2 years after the share acquisition the underlying real estate is used for activities that entitle the owner (entity) to recover at least 90% of the VAT. With respect to asset deals, no changes are proposed concerning the concurrence exemption from real estate transfer tax. Environmental measures A number of environmental measures are proposed, the most important of which are an increase in the carbon emissions tax from 2024 and the extension of existing tax incentives (albeit at reduced percentages). In addition, it has been stated that all relevant tax breaks for the 'fossil industry' and their effectiveness have been identified during the last government period. However, due to the caretaker status of the current cabinet, any decisions regarding potential adjustments to these tax incentives will be deferred to the next cabinet. Other tax changes as per 2024 Box 2 tax rates for income from substantial interest As per 2024, the flat rate of 26.9% will be replaced by a general rate of 31%, with a step-up rate of 24.5% applying to the first EUR 67,000 of income from substantial interest. In short, a substantial interest is held if a private shareholder owns 5% of a company (or 5% of a special class of shares). Box 3 – income from savings and investments From 2024, the box 3 tax rate (which applies to income from passive investments) will increase from 32% to 34%. In addition, further guidance has been published on a number of points to determine the relevant tax base for box 3. The introduction of a new box 3 regime based on actual income will be delayed from 2026 to 2027. 30% ruling limited to maximum public sector salary Employees recruited from abroad who have specific expertise that is rare in the Netherlands are offered a favourable tax regime under which 30% of their gross salary can be paid as a net remuneration. From 2024, the application of the 30% ruling will be limited to the maximum salary for the public sector (EUR 223,000 in 2023). For existing 30% rulings with an expiry date after 1 January 2024, a transitional regime will be introduced under which the limit will apply from 1 January 2026. The way forward In the coming months, the 2024 Tax Plan will be discussed in both chambers of Dutch parliament. This means that the proposed measures are subject to change. We will keep you informed of any relevant changes. Please do not hesitate to contact us if case you have any questions.
06/09/2023
European real estate investment proved volatile in 2022, despite a promising...
Total investment across the European real estate market fell by around 14% in 2022 compared to the previous year, coming in at EUR 248 billion, according to global law firm CMS' European Real Estate Deal...
03/05/2023
Real estate transaction costs and taxes in the Netherlands
1. Due diligence costs for the purchase of real estate 1.1 Municipal search Cost Variable VAT Nil 1.2 Utility search (each service) Cost Variable (Sewerage charges, real estate property charges, water...
01/05/2023
CMS assists Witec shareholders in sale of majority stake to Gimv
CMS has assisted the shareholders of Witec, a developer and manufacturer of high-end precision and high-tech parts and systems, in the sale of a majority stake to Gimv, a listed investor in innovative...
07/04/2023
CMS advises T&S Groupe on the acquisition of TOPIC
CMS has assisted Technology & Strategy Groupe (T&S), a European leader in engineering and digital consulting, with the acquisition of Topic Ventures B.V. and its 13 subsidiaries. TOPIC is active as an...
03/03/2023
Dutch Supreme Court issues landmark decision on scope of anti-base erosion...
On 22 February 2018, the European Court of Justice (ECJ) issued its decision in the joined Cases C‑398/16 and C-399/16. The decision regards the compatibility of the Dutch fiscal unity regime in the Dutch Corporate Income Tax Act with the freedom of establishment in the Treaty on the Functioning of the European Union. The former case (C-398/16) concerned a Dutch company (DutchCo) which received a loan from its Swedish parent company (TopCo), loan 1, which was used to make a capital contribution in an Italian subsidiary (ItalianSub). ItalianSub used this capital contribution to acquire part of the listed shares in an Italian group entity (SpA). The non-listed shares in SpA were held by TopCo. Subsequently, DutchCo directly acquired the remaining part of the listed shares held by third parties in SpA after the public bid. The purchase price of this shares were also financed by DutchCo with a loan obtained from TopCo (loan 2). Case C-398/16 dealt with compatibility of the fiscal unity rules during the tax year 2004. Today (3 March 2023), the Supreme Court issued a decision in case 21/00299 that addresses the Dutch tax treatment of DutchCo in later tax years. The Dutch tax authorities again tried to deny the tax deductibility of the interest costs in respect of both loan 1 and loan 2, invoking the anti-base erosion rules of section 10a of the Dutch Corporate Income Tax Act (CITA). Section 10a CITA stipulates that interest on debt is not deductible if such debt is due to an affiliated entity where that debt is related to (inter alia):a capital contribution to an affiliated entity (like here DutchCo contributed to ItalianSub), orthe acquisition or extension of an interest in an entity that is an affiliated entity after such acquisition or extension (like here DutchCo also acquired shares in the affiliated SpA). An exception to the non-de­duct­ib­il­ity pursuant to Section 10a applies if the taxpayer makes it plausible that both the debt and the related transaction are predominantly based on business considerations. For purpose of these rules, also loans entered into under arm's length conditions can be treated as not being based on business considerations. In today's decision the Supreme Court considers that with regard to the examination of the motives for the relevant transactions (the acquisition of the SpA shares and the contribution to ItalianSub) and debt (loan 1 and loan 2), it is to be understood that only the considerations underlying those transactions and debt are relevant. In that examination, it is important that it is inherent in the system of the CITA that the taxpayer in principle has freedom of choice in the method of financing a company in which he participates. To the extent that the anti-base erosion rules infringe this freedom of choice by not allowing a tax-deduction of interest owed, these rules must be interpreted restrictively. The Supreme Court also considers that in addition to the freedom of choice as regards financing, a taxpayer, and in the present case a group of companies, has the freedom to locate its economic interests and (financial) resources in a company residing in the Netherlands (i.e., to 'use' a Dutch resident company) even if that choice is determined by tax considerations. The anti-base erosion rules are not aimed at limiting this second freedom. According to the Supreme Court that freedom applies to the set-up of a group, meaning that no provision of the CITA or any principle underlying it contains norms as to where within the group activities are placed and where holding and intermediary activities or financing activities are carried out. For purpose of the anti-base erosion rules an external acquisition – like here the direct acquisition by DutchCo of shares in SpA held by third parties – should in the vast majority of cases be considered being based on sound business considerations. The Supreme Court considers that a debt is in principle predominantly based on business considerations if the funds used for granting the loan have not been diverted from another party via the actual lender of record. This also applies, according to the Supreme Court and contrary to the Dutch tax authorities' view, to a debt related to a transaction other than an external acquisition, which falls within the scope of section 10a of the CITA- such as the capital contribution by DutchCo to ItalianSub - if predominantly business considerations underlie the other transaction. The Supreme Court decides that from the parliamentary history of Section 10a it follows that a debt from an affiliated party may be predominantly based on business considerations if the affiliated lender has sufficient substance and, through its financing activities, performs an active financing function within the group of entities affiliated with the Dutch taxpayer (hereinafter: financial pivot function). According to the court it is consistent with fulfilling such a financial pivot function, and thus an arm's length, non-tax consideration, that this financing entity raises funds from group entities and from third parties and then uses these funds to make loans to other group entities (such as the taxpayer). In other words, in principle, a debt is predominantly based on commercial considerations if the affiliated entity from which the taxpayer obtained the debt performs financing activities in such a way that it thereby performs a pivotal financial function. Under such circumstances, funds cannot be said to have been diverted in a non-busi­ness-like way. This is not different if the affiliated lender obtained the funds used for that loan from another entity belonging to the same group. On the contrary, according to the court, performing a pivotal financial function within the group will often give rise to this. Therefore, if the affiliated entity performs a pivotal financial function, successful reliance on the rebuttal mechanism of Section 10a will not require to establish a link between the funds outstanding - from time to time - in the form of loans granted (the asset side of the lender's balance sheet) and the funds raised - from time to time - in the form of loans taken up and deposits obtained (the liability side of the lender's balance sheet). When assessing whether an affiliated entity performs a pivotal financial function through its financing activities, the circumstances of the case must be considered in context. Central to this is that the entity or independent business unit performs an active financing function within the group of entities related to it. Furthermore, the entity or independent business unit in question must be mainly engaged in carrying out financial transactions on behalf of entities belonging to the group, such as borrowing and lending money and managing excess group resources. Furthermore, that (business unit of the) entity will have to be independent in the day-to-day conduct of its business, including the management of outstanding funds, and for that purpose it will have to have sufficient and competent staff and, if it is an independent business unit, its own administration. If that (business division of the) entity is bound by a centrally determined strategy for the group, this mere circumstance does not prevent it from being independent. Finally, the Supreme Court also addressed the tax authorities' position that if deductibility of the interest costs can not be based on Section 10a, that such deductibility would have to be refused based on abuse of law considerations. According to the court this position, which has been defended by the tax authorities ever since these anti-base erosion rules were introduced in 1996, is not possible. The prevailing doctrine is that two cumulative conditions must be met for abuse of law (fraus legis) to apply. First, tax avoidance must have been the overriding motive for carrying out the transaction(s), the motive requirement. This is a subjective requirement. Second, the act(s) must be contrary to the purpose and spirit of the law, also known as the norm requirement. This is an objective requirement. If interest costs are tax-deductible on the ground that the taxpayer has made it plausible that the loan and the related transaction are predominantly based on business considerations, this excludes the fulfilment of the motive requirement for application of abuse of law doctrine in respect of this same loan and transaction, according to the Supreme Court in today's decision. This means that the deduction of interest in that case cannot still be refused on the basis of the Dutch tax authorities reliance on this doctrine. Conclusion From today's decision it follows that:as decided before, the CITA does not prevent an international group of organizing its group in a certain way (including the use of a Dutch entity), unless specific rules apply;as decided before, the CITA does not require a Dutch taxpayer to be financed in a certain manner or to finance specific transactions in a certain manner, unless specific rules apply;if a transaction is based on business considerations and a Dutch taxpayer obtains a loan from an affiliated party that performs a pivotal financial function within the group, such taxpayer should be able to successfully apply the rebuttal rule under Section 10a, causing the tax-de­duct­ib­il­ity of the interest costs not to be restricted based on the anti-base erosion rules;if a Dutch taxpayer successfully applies the rebuttal rule under the anti-base erosion rules, there is no room for the Dutch tax authorities to deny the tax deductibility of the interest costs based on the general abuse of law doctrine. Clearly, today's decision is welcomed by many taxpayers. Obviously, other elements of the CITA and other Dutch tax laws need to be considered before any decision about the structuring of a transaction, and its financing, can be taken.