01/02/10 - Dutch 'interest box' regulation on hold
Together with the June 2009 proposals to amendment of the Dutch Corporate Income Tax Act, also the regulation on the mandatory 'interest box' were published by the Dutch Ministry of Finance. At the beginning of July 2009, the EU Commission had already decided that the favoured taxation of the group interest income – as planned by The Netherlands – is no inadmissible governmental aid (cf. Tax Journal 09/2009).
In a letter of 5 December 2009, the Dutch Secretary of State for Finance has presented the tax experts' comments on the 'interest box' regulation to the Dutch parliament. On the one hand, a fast implementation of the regulation was suggested to promote the investment climate and attractiveness of The Netherlands as location for groups' parent companies. On the other hand, the regulation would have created unwanted tax detriments for foreign investors. The Ministry of Finance announced that an implementation of the regulation regarding the taxation of interest can be expected only in case the regulation does not have adverse tax effects for foreign investors. However, there is a certain risk that due to possible concessions to avoid those adverse tax effects, the EU Commission could assess the proposed regulation as inadmissible governmental aid.
A commission, who is investigating the possibilities of a general amendment of the company taxation, was requested to investigate to which extent the advantages of an 'interest box' regulation could be reached without triggering possible negative effects for the taxation of investors at the same time. The decision of the Dutch government regarding the implementation of a possible new regulation depends on the outcome of such a investigation.
However, due to the resignation of the Dutch government in February 2010, one cannot expect a decision regarding the new regulation within this year. Thus, it is currently uncertain when and in what form a new 'interest box' will be implemented.