Following the public consultation initiated on 24 October 2022, on 31 May 2023 the government presented draft legislation to the Dutch parliament to align local laws with the latest international tax agreements, the new legislation will sit alongside Corporate Income Tax.
The proposal is based on the EU Directive of 14 December 2022, regarding the implementation of the OECD’s Pillar II project in the European Union by the agreeing territories by 31 December of this year, in order to create a coordinated and consistent approach against base erosion and profit shifting (BEPS).
Pillar II brings significant change, as it introduces an effective minimum tax rate of 15% on a global scale for all those entities subject to requirements. It includes two domestic rules in line with GloBE (Global Anti-Base Erosion rules):
· The Income Inclusion Rule (IIR), that is expected to enter into force in the Netherlands with effect for fiscal years initiated on and after 31 December 2023;
· The Undertaxed Payment Rule (UTPR), that is expected to enter into force in the Netherlands with effect for fiscal years initiated on and after 31 December 2024, and which will introduce a Qualified Domestic Minimum Top-up Tax (QDMT) on certain benefits of the Dutch entities forming part of a multinational group and subject to the scope of Pillar II.
Presenting the legislation to parliament is an initial step and, given the text could still be subject to modifications due to national and international considerations before 31 December 2023, we recommend staying up to date on its development and potential implications for both the current and future tax periods.
Please do not hesitate to contact us if you require further information or to arrange for an appointment: https://www.international-tps.com/en/contact/