22-11-2011
Update on the 2012 Dutch Corporate Tax Proposals

On November 17, 2011, an amended version of the 2012 changes to Dutch tax legislation has been approved by the Lower House of the Dutch Parliament. The Bill needs to be approved by the Upper House of Dutch Parliament. No further amendments are expected and, in principle, the legislation will enter into force as per January 1, 2012. The most important proposals for corporate taxpayers are summarized below. Other changes in the field of wage tax/income tax and VAT are proposed but are not detailed in this tax alert.

For more detailed information on a particular topic, please click on the respective title below.

Restrictions on interest deductions
Further restrictions are proposed on interest deductions in leveraged acquisition structures involving Dutch target companies. In addition to the existing Dutch anti-base erosion and thin-cap regimes, the leveraged acquisition holding regime will also apply to third-party acquisition debts.

Based on this new regime, interest may not be deducted if: 

1. the annual interest expenses (on acquisition debt) exceed the amount of the own profits of the holding company on stand-alone basis;
2. the interest is related to excessive acquisition debt ("excessive interest"); and
3. the excessive interest exceeds an amount of € 1,000,000

The definition of excessive acquisition debt has been changed in the amended proposal. Excessive acquisition debt is, in principle, defined as the amount of the acquisition debt which exceeds 60% of the acquisition price. Subsequently, for a seven year period, the maximum debt percentage of 60% annually decreases by 5%, until a 25% residual debt remains. As a result the taxpayer is encouraged to gradually repay the acquisition debt.

It was expected that a grandfathering rule would apply to acquisitions prior to December 31, 2011. At the last moment this was changed to November 15, 2011. Furthermore, it has been announced that potential new legislation with respect to interest deduction restrictions in relation to foreign shareholdings will be published in the course of 2012.

The amended 30% ruling regime for expats
Under the 30% ruling regime, extra-territorial employees can qualify for a tax-free reimbursement of 30% of their wages. As per 1 January, 2012 the rules to qualify for this regime will change. The 30% ruling will as of January 1, 2012 be issued for a 8 year period (now 10 years). Furthermore the salary minimum in order to qualify for specific expertise has been reduced from € 50,000 to € 35,000.