Tax Experts Roundtable Discussion, April 3, 2008

Investigating the Tax Climate in the Netherlands

Last April 3 AmCham - together with Grant Thornton - hosted a roundtable discussion in Noordwijk's Huis ter Duin on the 2007 changes to the Dutch tax regime and the impact these changes have had to date on the investment climate in the Netherlands. The point of the discussion was to determine if the Netherlands is still attractive as an investment country for US companies entering the Dutch and European market.

The basis for the discussion was a survey conducted by Intomart GfK to the specifications of Grant Thornton and AmCham. Fifteen questions on tax related issues were posed to US tax decision makers of US companies with an office in the Netherlands and Dutch tax decision makers of US companies with an office in the Netherlands.

Panel members included tax managers Gert-Jan Boer of IBM Nederland and Alexander van den Bosch of Eastman Chemical BV and professor of international tax law Tanja Bender of Leiden University. Other panel members were Jeff Olin from the Grant Thornton office in Chicago and Jacob Mook and Michiel van den Berg of the GT office in Amsterdam.  

Corporate income tax rates (CIT rates) are of major importance to decisions to invest in the Netherlands for about 25% of companies. CIT rates in the Netherlands are deemed competitive compared to other EU countries. Other than CIT rates, the participation exemption and dividend withholding tax rate are seen as important in the decision making process. In particular, the participation exemption - as one of the main pillars of the Dutch corporate income tax - is motivated by the desire to avoid double taxation when the profits of a subsidiary are distributed to its parent company. Its attraction is such that it has been copied by many other countries in recent years.  The 2007 reforms improved the regime still further. The discussants were unanimous that more improvement - particularly a simplification of the regime - is necessary for the country to remain competitive.

While the participation exemption is seen as an important element in the fiscal attractiveness of the Netherlands, a point of concern is that only 49% (according to the survey) of US companies are familiar with the regime. Clearly room for a marketing initiative for those involved in attracting US investors to the Netherlands. Even if a holding structure is in place tax managers are not always aware of the subtleties and changes that have taken place in recent years. This is an indication that the PE regime is too complex. In fact some panel members were of the opinion that the PE regime should, and could, be the number one reason (instead of CIT rates) for investing in the Netherlands.

Other 2007 reforms, such as the patent box and interest box, were also noted as overly complex by the panel.

In conclusion the panel agreed that the country is still attractive as an investment location for US companies. It is, however, vital that reliability is maintained and that transparency and consistency are featured to retain the Netherlands attractiveness as a location to invest.

 If you wish to view the photo gallery for this event, please click here.