Dutch Supreme Court Eases Accountability Of Limited Partner In Case Of Violating Management Restrictions

By | Tax

The Dutch Supreme Court overturned a verdict by the Dutch High Court in which it limits the accountability of the limited partner (“Commanditaire Vennoot”) of a partnership (“Commanditaire Vennootschap”) in case the limited partner violates the management restrictions, as the management activities are solely reserved for the general partner (“Beherend Vennoot”).

When the management restrictions are violated (i.e. the limited partner acts as if it was the general partner), the Dutch Commercial Code dictates that the limited partner should be held accountable to all creditors of the partnership, even if the liabilities cannot be linked to the breach (for example, even if the liabilities already existed before the breach). The Supreme Court ruled that the sanction imposed should be in proportion with the breach. The accountability should therefore be limited to the liabilities of the partnership that are linked to the breach.

OECD Releases Revised Discussion Draft On Permanent Establishments

By | Tax

The initial Action 7 discussion draft on PE’s has been replaced by a revised discussion draft, which largely focusses on expanding the scope of the dependent agent rule and narrowing the scope of the “specific activity” PE exemptions as mentioned under the current Article 5(4) MC. Furthermore, the revised discussion draft proposes an anti-fragmentation rule intended to prevent abuse of PE rules by dividing activities and assigning them to associated enterprises.

Proposal For UBO Register Adopted By Parliament

By | Legal, Tax

On 20 May 2015, the European Parliament adopted the Fourth Money Laundering Directive. This directive obligates EU member states to adopt a UBO-register of corporate and legal entities. Such register should include at least the name, the month and year of birth, the nationality and the country of residence of the UBO, and additionally, the nature and extend of the beneficial interest held by the UBO. The register should be accessible to the respective tax authorities, obliged entities (for example banks, lawyers and notaries, as they have to perform KYC procedures) and the public if they have a “legitimate interest”.

EU And Switzerland Initiate Tax Transparency

By | Tax

The European Union and Switzerland have initiated an agreement that will require both Switzerland and the EU member states to automatically exchange information as of 2018 in relation with the financial accounts of their citizens. The financial account data includes, amongst others, names, addresses, tax ID numbers and dates of birth of accountholders.

The driving force behind the agreement is to prevent EU residents to hide undeclared income in Swiss accounts, as to evade paying taxes.

Underminister Of Finance Informs Parliament On Ruling Practice

By | Tax

In an effort to provide as much transparency on the Dutch Ruling practice as possible without violating confidentiality, the Dutch Under Minister of Finance provided insight information on the Dutch ruling practice in a letter to Parliament. He provided information in relation to the ruling practice itself, in relation with the type of rulings concluded, as well as information on the number of rulings concluded.

The Under Minister of Finance also stated that he sees no reason to systematically inform Parliament, thus without cause, of concluded rulings. He declared that systematically informing Parliament of concluded rulings, even if informed on a confidential basis, violates the trust of the tax payer in the Dutch tax authorities, and with that, the trust in the Netherlands as a state of residence.

OECD Releases Three Documents Addressing Focus Areas Action Plan BEPS

By | Tax

On 6 February 2015 the OECD published three papers addressing different developments in the BEPS Action plan:

Action 5: Agreement on modified nexus approach for IP regimes
Action 13: Guidance on the implementation of transfer pricing documentation and country-by-country reporting
Action 15: A mandate for the development of multilateral instrument on tax treaty measures to tackle BEPS

The OECD will present these developments during the G-20 Ministers of Finance meeting of 9-11 February 2015.

OECD Releases first BEPS Recommendations To G-20

By | Tax

In accordance with the base erosion and profit-shifting (BEPS) project, the OECD on September 16 released its first recommendations to G-20 finance ministers and central bank governors for a coordinated international approach to combat tax avoidance by multinational enterprises. The reports address seven of the 15 items listed in the BEPS action plan.

Amendments To The Parent Subsidiary Directive Adopted

By | Legal, Tax

The EU-Council of Economic and Finance Ministers have adopted the amendments to the Parent Subsidiary Directive, challenging hybrid financial instruments which have the characteristics of both debt and equity.

A payment on hybrid financial instruments could be eligible for tax deduction in the state of source, and at the same time, be tax exempt in the state of residence (double non-taxation). The adopted amendments provide for a mandatory limitation of the exemption in the state of residence, to the extent the (interest) payments are deductible in the state of source.

All EU member states are required to implement the amendments in their domestic legislation no later than 31 December 2015.

Dutch Guidance Notes On Intergovernmental Implementation Of FATCA

By | Legal, Tax

In January, the Dutch Minister of Finance published guidance notes in relation with the intergovernmental agreement (“IGA”) concluded between the Netherlands and the United States.

The IGA facilitates the intergovernmental implementation of FATCA, aimed to combat tax evasion by U.S. persons holding assets through offshore entities and accounts.

The guidance notes provide for technical clarification of certain aspects of the concluded IGA.