House of Representatives adopts part of Tax Plan 2022 package | Deloitte Netherlands

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House of Representatives adopts part of Tax Plan 2022 package

On 11 November, the House of Representatives approved most of the proposals included in the Tax Plan 2022 package, as well as the bill to combat mismatches in the application of the arm's length principle. Two other bills have been shelved.

29 November 2021

Introduction

On 11 November 2021, the House of Representatives approved parts of the Tax Plan 2022 submitted on Budget Day, involving the following bills:

  • Tax Plan 2022
  • Other tax measures 2022
  • Tax liability measure from the second EU Anti-Tax Avoidance Directive (Implementation) Act
  • Reduction of rate and monthly adjustment landlord levy


Another bill adopted by the House of Representatives on 11 November 2021 aims at counteracting mismatches in the application of the arm's length principle in corporate income tax. The House of Representatives also agreed to repeal the Job-related Investment Credit, with retroactive effect to 1 January 2021.

Three bills (Tax Plan 2022, the Tax Liability (Implementation) Act and the Arm’s Length Principle (Mismatches) Act) have been amended, which we will discuss below.

Energy tax refund possibility for energy-intensive businesses abolished

This amendment to the Tax Plan 2022 formally abolishes the possibility to refund energy tax on the consumption of energy products by energy-intensive businesses. This specific provision had already ceased to have any material effect for some time,  as the covenants required to apply the scheme were no longer issued.

Concurrence of corporate income tax on open CVs and hybrid mismatch regime

This amendment serves to remove a contradiction between the corporate income tax levied on open CVs and the application of the hybrid mismatch rules. While the part of an open CV’s profits accruing to the managing partner is tax deductible, an open CV can qualify as a hybrid entity as well. One of the issues dealt with in this so‑called secondary linking rule of the hybrid mismatch regime, is that it is not possible to deduct fees and payments on which the source state should have applied the rules against hybrid mismatches. Hence, the amendment restricts the deduction of the profit accruing to the managing partner to the extent that the secondary linking rule applies. This serves to prevent a hybrid mismatch from as yet arising in the Netherlands.

Acquisition of an asset as part of a merger or demerger

The new article 8bd Corporate Income Tax Act 1969 proposes that if an asset is acquired from an affiliated entity, using the market value is not permitted in certain cases. Instead, the balance sheet valuation must correspond to the amount subject to tax with the transferor. The amendment ensures that this regulation now also covers the acquisition of an asset as part of a merger or demerger.

Voting postponed

The vote on two other bills included in the Tax Plan 2022, has been postponed:

  • Stock Option Rights (Tax Arrangement) Act
  • Delegation Provisions (for Compensation of Cases of Hardship) Act


On the back of strong criticism from the House of Representatives, the bill to amend the tax arrangement for stock option rights is being reconsidered. The arrangement is intended for start-ups and scale-ups and various parties had expressed their concern that large companies would use it too. Hence, the State Secretary for Finance is considering to impose entry requirements, so large companies can be excluded. But this first requires verification whether this does not violate state aid rules. The State Secretary also wants to reassess whether the bill’s implementation costs are proportionate to the benefits.

The bill on delegation provisions for the compensation of cases of hardship has been postponed as well, because the House of Representatives has expressed a preference for debating the bill together with another bill on allowances, partly in response to criticism from the Council of State.

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