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Value added tax (VAT)

Law Firm in the Netherlands specialised in Value added tax (VAT)

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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 you do not have a VAT-registered business, you will be confronted with it in some way or other. In that case, VAT paid on your purchases is a cost item. Today more than 130 countries have VAT or a similar levy. In this age of globalization you will increasingly be confronted with VAT legislation, both in the Netherlands and elsewhere.  

Regulations in the area of VAT have become extremely complicated over the years. Each sector has its own VAT problems. This demands specialist knowledge that the VAT specialists at CMS possess. Whether it concerns VAT matters relating to property transactions, international trade and services or not-for-profit organizations, we will be pleased to use our specific knowledge and experience to optimize your VAT position.

Our VAT specialists work closely with lawyers and civil-law notaries at CMS and in the international CMS organization. They will assist and advise you on how to minimize the consequences of charging VAT with your transactions and on optimizing your tax position. In discussions or proceedings with the tax authorities, the aim will always be to achieve the best result for your organization. In addition, our VAT specialists can organize practical VAT training courses for your personnel and analyse your organization to see where savings can be made and/or where tax risks may exist. They will also be pleased to assist you by taking care of applications for VAT refunds.

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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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Taxation of the digital economy
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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.
21/09/2022
Dutch 2023 tax plan and other tax proposals
On Tuesday 20 September 2022 the Dutch state secretaries for Finance published the 2023 Tax Plan and related legislative tax proposals. This newsflash discusses the proposals we consider most relevant...
17/04/2020
Insight: Using VAT as a tool to fight climate change?
In the second of a series of articles on climate change from a tax perspective, Elisabeth Ashworth of CMS Francis Lefebvre Avocats and Etienne Cox of CMS Netherlands consider whether value-added tax can...
12/03/2019
Taxation of the digital economy
This publication aims to identify various aspects of the digital economy and to consider whether income taxes are the most effective and efficient way to tax this economy. Do we need a revolution in the...
06/06/2018
Tax avoidance in a globalised world
This Guide illustrates the ongoing development of anti-avoidance tools on every continent. Africa, Europe, Latin America and Asia are equally concerned. Inspired by the OECD and stimulated by European...
03/02/2017
U.K. employees in Europe after Brexit? Be smart and be prepared!
Employers in the European Union may be able to continue to employ U.K. nationals after Brexit, but they need to consider the legal and tax implications now
10/12/2015
ECJ: the management of real estate investment funds is VAT exempt
According to the ECJ’s decision in case Fiscale Eenheid X (C-595/13), the management of such funds is VAT exempt, provided that the fund is subject to a national or EU regulatory regime. Fund management...
22/05/2015
Is the management of real estate investment funds VAT exempt?
Based on the EU VAT Directive, the management of special investment funds is VAT exempt in all EU Member States. The Dutch Supreme Court has referred the question to the ECJ for a preliminary ruling...
17/07/2013
China announces extension of the BT/VAT reform all over the country
Starting from 1 January 2012, China has launched a pilot business tax (“BT”) / value added tax (“VAT”) reform with Shanghai as the first pilot area. The purpose of such reform is to shift certain...
28/12/2010
China Imposes Additional Tax on Foreign Enterprise, Invested Enterprises...
On 4 November 2010, the PRC State Administration of Taxation and the Ministry of Finance jointly issued the Tax Circular Caishui [2010] No. 103 to levy City Maintenance and Construction Tax ("CMCT") and...