In 2019, the Dutch Government (Government) has established a commission (Commission) to advise the Government on further measures for ‘fairer’ taxation of multinational companies while it is ensured that the Netherlands maintains to have an attractive tax investment climate for multinational companies. The Commission consists of representatives from the Dutch Government, tax advisers and academics.


On 15 April 2020, the Commission published its report towards balance in the corporate income tax (Report). The Commission has three main recommendations for the Government:


  • It is necessary to conduct further research to gather more information about the corporate income tax position of multinational companies worldwide;
  • The Government should (maintain to) take a leading role in international cooperation initiatives to design a harmonized CIT system in an international context; and
  • The Government should take a number of unilateral tax measures (Measures) to broaden the CIT scope of multinational companies.


Below we will discuss the proposed Measures in more detail.


  1. The Measures

The proposed Measures can be divided into two categories:


  • Measures to preserve a minimum taxable basis for profitable Dutch (multinational) companies; and
  • Measures to eliminate international tax mismatches.


Below we will list the most important Measures per category.


Measures to preserve a minimum taxable basis for profitable Dutch (multinational) companies.


  • Limitation of tax loss compensation to 50% of the taxable profit in excess of EUR 1.000.000. Tax losses may be carried forward indefinitely (currently 6 years).
  • Limitation of the deduction of shareholder / head-office costs.
  • Limitation of deductibility of intercompany royalties.
  • Consider limiting deductibility to a percentage of the taxable profit of royalties, interest and shareholder / head-office costs on a combined basis.


Measures to eliminate international tax mismatches.


  • Make the current CFC rules more effective (strengthen).
  • Omit downward transfer pricing adjustments (informal capital doctrine) of earnings if there is no corresponding upward adjustment correction of profits in the other country.
  • Combat tax rate mismatches relating to intra-group capital transfers. It should be ensured that assets with large capital gains accumulated in tax haven jurisdictions will not end up tax-free in the Netherlands, by restricting the depreciation on such assets.


In addition to the Measures described above, the Commission has also listed some other potential measures which may be considered by the Government.


  • Strengthen the EBITDA-rule, whereby currently 30% of the fiscal EBITDA (earnings before interest, taxes, depreciation and amortization) can be deducted as interest costs, it may be considered to lower that percentage to 25%.
  • Limit deduction of interest on debts to finance the acquisition of foreign participations because the benefits from such participation are exempt under the participation exemption (please note that the Netherlands already had such interest deduction limitation in place until ultimo 2018).
  • Limit the deduction of costs paid to group companies in low-taxed jurisdictions.
  • Introduction of a general withholding tax on interest and royalties (please note that a withholding tax on intragroup payments to low-taxed jurisdictions and in other abusive situations will be introduced as of 1 January 2021).
  • Further strengthening of the CFC rules.
  • Adjust the rules for the required equity of service companies (conduiting interest and royalty payments).
  • Introduction of a digital services tax.
  • The introduction of a surtax (or deduction) related to the amount of employment/salaries paid by the taxpayer.


Please note that regarding these other potential measures there was no consensus within the Commission. These other potential measures may therefore be considered as controversial.


Finally, to maintain an attractive tax investment climate for multinational companies, the Commission recommends to consider the following compensatory measures (if (certain) measures described above are implemented):


  • Reduction of the CIT rate;
  • Reduction of the innovation box tax rate;
  • Soften the current legislative proposal that limits the deduction of liquidation losses (on dissolved participations) / termination losses (on dissolved permanent establishments).
  • Allowing the deduction of costs in connection with acquisition/disposal of a participation.


The proposed Measures of the Report do not have an official status, they are non-binding and only constitute advice to the Government.



  1. Next steps

The Report will now be studied by the Government. It is expected that the Government will provide an official response with their views on the Report and the proposed measures this summer.


It is uncertain how the three recommendations made will be received by the Government, also taking into consideration the current uncertainty surrounding the Corona-crisis.


If you have questions or if you would like to receive additional information regarding the Report, please do not hesitate to contact us.


Written by by Robert de Vries and Thijs Visser