The Dutch minimum substance requirements became more stringent from 1 April 2018. The requirements have to be satisfied in order to qualify as a CFC with real substantial economic activities under the CFC legislation.

 

The requirements would also be applicable to certain anti-abuse legislation as laid down in the Dutch corporation income tax act and Dutch dividend withholding tax act.

 

The following substance requirements have been added to the list of existing substance requirements:

• At least half of the total number of directors under the articles of association with decision-making authority reside or are actually established in the Netherlands.

• The directors residing or established in the Netherlands have the required knowledge to perform their duties properly. These duties include at least decision making based on the entity’s own responsibilities within the framework of normal group involvement on transactions which will be entered into by the entity and ensuring they are settled properly.

• The entity has qualified staff for proper performance and recording of transactions entered into by the entity.

• Board decisions are taken in the Netherlands.

• The entity’s main bank accounts are held in the Netherlands.

• The bookkeeping takes place in the Netherlands.

• The entity has - in any event until the time of examination - properly complied with its obligations to file tax returns, including corporate income tax, payroll tax, VAT, etc.

• The entity’s registered office is in the Netherlands. As far as it is aware, the entity is not considered a tax resident in any other country.

• The entity has sufficient equity for the functions it performs, taking into account the assets used and risks run.

• The Dutch company incurs annual salary costs of at least EUR 100,000;

• The relevant Dutch company has (for at least 24 months) office space at its disposal in the Netherlands.

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Please note that these minimum substance requirements function as a ‘safe harbour’. This means that it would also be possible to evidence a real substantial economic activity in other ways.