In our newsletter of December 2011 we informed you that, on 12 December 2011, the Dutch Ministry of Finance published the headlines of a new Tax Arrangement for the Kingdom of the Netherlands (Belastingregeling voor het Koninkrijk or BRK), which provides for the avoidance of double taxation on income and capital between the Netherlands and Curacao. This new Tax Arrangement, which was expected to enter into force on 1 January 2013, should replace the existing BRK, which dates back to 1964.

Expected to become effective 1 January 2014
In a press release of 21 December 2012, the Dutch Ministry of Finance announced that progress was made with respect to the framework for the new Tax Arrangement between the Netherlands and Curacao, that a final agreement is expected to be reached during 2013 and that accordingly the new BRK is expected to become effective from 1 January 2014.

Anti-abuse provisions
We also informed you in our newsletter of December 2011, that the BRK (article 35a) currently provides for the possibility for the Netherlands and Curacao to levy their taxes based upon any of their specific anti-abuse provisions, notwithstanding any of the other provisions of the BRK.

Dutch non-residents taxation rules
If the Dutch tax rules on substantial interest (article 17, paragraph 3(b) of the Dutch Corporate Income Tax Act) qualify as domestic anti-abuse provisions under the BRK, a non-resident shareholder, i.e. the Curacao company, holding a share interest (or option or profit rights) of at least 5 percent in a Dutch company, may be taxed in the Netherlands as a non-resident taxpayer if this shareholder lacks economic substance, if such substance does not exist at a higher level in the corporate structure, and if the main goal or one of the main goals of the structure is to (artificially) avoid Dutch income tax or dividend withholding tax.

Not invoked during 2013
However, in the press release the Dutch Ministry of Finance confirmed that for 2013 (like they have confirmed for 2012 in the headlines published on 12 December 2011) article 35a of the BRK will not be invoked in order to apply the Dutch non-residents taxation rules.

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