On September 17, 2019, the Dutch government released the Budget 2020 containing its Tax Plan 2020 with certain amendments to Dutch tax law. Please find the highlights below of the changes that will have effect as per January 1, 2020:
Corporate income tax
Reduction of tax rates
The corporate income tax rate is currently 19% for the first 200,000 of profit and 25% for profit exceeding 200,000. The legislative proposal includes a reduction of the rates as follows:
Interest deduction limitations
Minimum equity rule for banks and insurers
A new interest deduction limitation will be introduced that targets Dutch tax-resident banks and insurance companies or Dutch branches of foreign banks and insurance companies, insofar as they are not sufficiently capitalized with equity.
In case the leverage ratio (equity / balance sheet total) of banks as calculated under the Capital Requirements Regulation 2013 is less than 8%, interest deduction is limited by the following formula:
(8 less actual leverage ratio) / (100 less actual leverage ratio) * interest costs = non-deductible interest
For insurance companies, the leverage ratio in the above formula is replaced by the ratio between equity and the total assets to be calculated on the basis of the rules of the Solvency II directive.
Non-deductible interest decision
In 2019, the Netherlands introduced the 30% EBITDA rule (see our tax alert regarding the 2019 Tax Plan for more information). The tax plan 2020 states that the tax inspector must make a formal decision when determining the amount of interest that is not deductible under the 30% EBITDA rule and available for being carried forward.
New requirements for the application of the Dutch tonnage tax regime
On July 26, 2019, the European Commission ("EC") approved the prolongation of the Dutch tonnage tax regime, a state aid measure, until December 31, 2028. However, the approval was granted under the condition that the Netherlands adds new requirements to its existing tonnage tax regime to bring it more in line with the EC's 'Maritime Guidelines' and case practice. Therefore, the Netherlands introduced three amendments:
Time/foreign charter cap: introduction of a 75% cap on non-EU/EEA flagged vessels held by the taxpayer on the basis of time/voyager charter compared to the annual total of the net day tonnages of all qualifying vessels of the taxpayer for the Dutch tonnage tax regime; Flag...