New CFC measure against tax evasion through foreign countries
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What changes?
A new measure against tax evasion will be introduced. With this measure it will be less appealing to shift profits to countries that levy fewer taxes.
From 1 January 2022, the order in which you offset foreign profit taxes will be fixed. You are no longer allowed to choose which part of your taxes will offset in the current year and which part you want to pass on to the coming years. This measure is an addition to the Controlled Foreign Company (CFC) measure. If you have multiple foreign partnerships or branches, the Dutch Tax and Customs Administration (Belastingdienst) will offset the foreign taxes for each CFC separately.
For whom?
- companies that are active in more than 1 country and that pay taxes abroad
When?
It is expected this change in legislation will enter into force on 1 January 2022.
Please note: The effective date of this measure is not yet final. Entry into force is subject to its passing through the upper and lower houses of parliament or proclamation of the Order in Council (Algemene Maatregel van Bestuur, AMvB) or ministerial decree and publication in the Staatsblad or Staatscourant (Government Gazette, in Dutch).