The Dutch government has rolled out an updated Decree on Avoidance of Double Taxation, refining how international tax agreements and arrangements are applied. This replaces the previous version from April 2023.
What’s new?
Here are the key updates:
- Costs in second-limit calculations: Clarification on what costs are included when calculating the second limit for tax reductions.
- Second-limit adjustments for fiscal years: Guidance for fiscal years that don’t align with the calendar year, especially when corporate tax rates change.
- No cost deduction for “tax sparing credit”: A change that clarifies there’s no cost deduction for fictional withholding tax.
Additionally, two significant changes relate to athletes and artists:
- Foreign tax credits: Offsetting foreign taxes against corporate tax now applies only to fiscal years starting before January 1, 2025.
- Expanded cost deductions: Cost deductions in treaty scenarios now cover withholding taxes on income and benefits for athletes and artists within a corporation.
Other updates are purely editorial and don’t affect the content of the decree.
When does it apply?
The new decree took effect on January 1, 2025, and the previous version has been withdrawn.
If you think this might affect your tax situation, it’s always a good idea to check with a tax advisor! You can always reach out to us at info@dutchtaxadvice.nl or complete our contact form on our website.
Source: Decree of December 13, 2024, No. 2024-31576, Ministry of Finance, Stcrt. 2024, 38766
