NETHERLANDS RULES REGARDING RESTRICTION OF INTEREST DEDUCTION AMENDED

Thin capitalization rules abolished
On 20 November 2012, the Second Chamber of Parliament approved the Bill including the abolition of the thin-capitalisation rules with respect to the deduction of interest expenses for Dutch corporation tax. This takes effect for taxable years commencing on or after 1 January 2013.

New rule regarding the restriction of interest deduction
These rules are abolished because the regime has become superfluous due to existing specific restrictions of the interest deduction possibilities and the introduction of a new rule regarding the restriction of interest deduction on loans taken up for investment in participations qualifying for the participation exemption, which are also effective as per 1 January 2013.

Administrative guidelines
On 12 October 2012 Administrative guidelines were released dealing with certain technical aspects of this new restriction rule. 

They address three specific aspects of the excessive debt financing rules: 

  1. application of the rules in the context of restructurings;
  2. interaction of the rules with the fiscal unity regime; and
  3. interaction of the rules with the restriction on interest deductibility for acquisition holding companies.

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