Doing Business In Or Via The Netherlands: Changes To Dutch Tax Law As Of January 1, 2012

(Originally published on January 18, 2012)

On 20 December 2011, the Dutch Senate has adopted the Tax Bill 2012. The maximum corporate income tax rate remains 25% and the participation exemption regime remains unchanged. Below please find a short summary of the most important changes that enter into force on 1 January 2012:

Restrictions on deductibility of interest on acquisition debt The Tax Bill 2012 introduces a new restriction on deductions for interest in respect of debt raised in connection with the acquisition of, or increase of an interest in, a Dutch target company that is included in a fiscal unity with the acquisition company. Pursuant to this new restriction, interest on acquisition debt can no longer be offset against the Dutch target company's taxable profits to the extend (i) the acquisition debt exceeds 60% of the purchase price in the year of the acquisition and (ii) the amount of interest expenses exceeds EUR 1 million. The maximum percentage of 60% will be reduced by 5% every year following the acquisition, down to 25% in year 8 and...