The Dutch implementation of the EU Anti-Tax Avoidance Directive 2 (“ATAD 2”) came into effect on 1 January 2020 for tax years starting on or after that date. ATAD 2 aims to neutralize hybrid mismatches resulting in situations with a double deduction or a deduction without inclusion. The Dutch tax law in relation to ATAD 2 includes a documentation requirement which means that in case a taxpayer checks the box in his corporate income tax return that the Dutch ATAD 2 provisions are not applicable, the administration of the taxpayer should include in its administration all information that substantiates the non-applicability of the hybrid mismatch rules. If the taxpayer does not have information on the non-applicability of the hybrid mismatch rules in its administration, the tax inspector could request the taxpayer to substantiate this, which may result in a shifting of the burden of proof.
Therefore, it is really important to determine the impact of ATAD 2 for Dutch corporate taxpayers. In case you have any questions or need assistance with assessing whether the hybrid mismatch rules would affect your business or clients, please reach out KC Legal.