The Netherlands has a long tradition of international trade and cross border activities. The open economy in a stable environment has, in combination with i.a. good tax and legal investment climate, been a foundation for the reputation as a great holding country.

The international rules for holding companies and the use of tax treaties have been a topic of many discussions.

On October 5, 2015, the OECD issued its final reports with respect to the Base Erosion and Profit Shifting action plan (BEPS). After this publication, many different initiatives and amendments have been announced and implemented.

These developments may have an impact on our clients that use e.g. group holding companies, group financing companies, royalty companies and IP holding companies. BEPS Action 6, for example, discussed the use of tax treaties. Also the use of hybrid entities and hybrid instruments are affected by the developments. The European rules of the parent-subsidiary directive have been amended and implemented differently in the European countries.

Recently, Willem Bongaertstax partner of the Dutch and Luxembourg offices, gave a presentation in Luxembourg on the recent developments, and shared his view on the way forward. By reviewing the group structure and functions performed, international groups can become ready for the future. The functions, activities and structure should be aligned. Upon request the slides can be made available to our clients and friends.

Action to be taken

International groups should, in order to make sure that their tax position is or remains to be optimal, determine whether planning is needed with respect to these recent developments, e.g.:

  • Check whether the group structure and functions performed are still in line with the future developments. 
  • Make sure to align the IP strategy and ownership location
  • Determine whether it would be beneficial to reorganize group functions.