Substance requirements in the Netherlands
Currently, Dutch companies predominantly (at least 70%) engaged in financing, and/or licensing activities that can claim the benefits of a tax treaty or EU Directive must declare in their annual Dutch corporate income tax return whether a defined set of substance requirements is met. If one or more of these substance requirements are not met, detailed information on the intra-group financing and/or licensing activities must be provided to the Dutch tax authorities. The Dutch tax authorities may then spontaneously exchange this information with the relevant foreign tax authorities, potentially resulting in levying of additional withholding tax.
As from the 1st of January 2021, it seems no longer required that the activities of the company do predominantly, comprising financing and licensing, to be captured by the above-mentioned defined set of substance requirements. Meaning that not meeting these requirements will much quicker trigger the spontaneously exchange of information with the relevant foreign tax authorities and potentially associated adverse tax consequences.