The Netherlands is well known for its favourable tax treatment of holding companies.
Provided certain requirements are fulfilled, interest on acquisitition debt is tax deductible. Plans have been published to further restrict the deduction of excessive interest. The provisions will provide that where the acquisition is followed by a request to be taxed as a group, the interest is only deductible from the taxable profits derived by the purchasing company.
The deduction restrictions will only apply to interest in excess of EUR 1,000,000 and if a debt:equity ratio of 2:1 is exceeded. The ratio will be determined at the level of the group and both interest on internal as well as external loans will be taken into account. Goodwill paid to acquire the shares of the subsidiary and equity allocated to participations will be eliminated after the tax consolidation and, consequently, will reduce the tax equity. However, the government considers a phased-write off of the goodwill within a period of 10 years.
It is expected that the above measures will apply from 1 January 2012.
The aforementioned restriction of the deduction of excessive interest may have a very wide scope because it also includes other interest expenses in addition to those related to the acquisition debt.
For further information please contact international tax expert Corney Versteden at HLB member firm HLB Van Daal & Partners.
Mr. Corney P.J.M. Versteden
HLB Van Daal & Partners
Prof. Asserweg 8
5144 NC Waalwijk, Netherlands
Phone: + 31 416 34 03 45
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