When to file Annual Accounts at the Chamber of Commerce

Every year, companies registered with the Kamer van Koophandel or Chamber of Commerce must file their Annual Accounts. Generally, Annual Accounts can be submitted 8 days after adoption at the Chamber of Commerce. This general rule, though, leaves room for ambiguity since the deadline for submission depends on the type of corporation. Yet, It is legally not possible to get a postponement of the submission of annual accounts. In all cases, the annual accounts must be filed within 12 months of the end of the financial year. 

Here you will find a layout of the most important points to remember.

 

Deposit Deadline  
The specific deadlines for submission are based on the type of corporation. 
For the bv (private company), as the most common type of corporation, the following rules apply:
Within 5 months of the end of the financial year, the board completes the accounts and presents them to the shareholders.
The shareholders can give the board permission to postpone this for 5 months in exceptional circumstances.
Subsequently, the shareholders have 2 months to adopt the annual accounts
If the financial and calendar years correspond, then the final deadline for submission is July 31st (5 + 2 months).  With the maximum postponement possible, this date can run to December 31st.

Exception
If each shareholder is also a director or supervisory director, signing of the annual accounts immediately leads to adoption.  In this case, the 2 month adoption period no longer applies.  For a private company, this means that you submit your accounts within 10 months and 8 days of the end of the financial year.  If the financial and calendar years are the same, the final submission date is thus November 8th.

Accounts that are not adopted on time
What if the shareholders have not adopted the annual accounts on time?  Then you submit the current annual accounts.  For a private company, these are submitted within 7 months of the end of the financial year.  If you have a maximum postponement of 5 months, you then submit the current financial accounts within 12 months (7 +5 months) after the end of the financial year.

Submit on time       
Not submitting annual accounts on time is prosecutable as an economic offense.  The Bureau Economische Handhaving (Office for Economic Enforcement) of the Belastingdienst (Inland Revenue) can draw up an official report on the basis of which the Openbaar Ministerie (Public Prosecutor) can impose a financial fine or refer the case to a judge.
Furthermore, you can become personally responsible if you do not submit your accounts on time and if your company goes bankrupt.  Ensure therefore that you submit your accounts within the appropriate time period.  The requirement to submit accounts is valid to the date of its removal.  

Please feel free to contact us for more information the Chamber of Commerce or Annual Accounts. 

al Data Protection: Can it Protect the Dutch Tax Authorities?

May 25th, 2018, The Dutch government strengthened the agreement made by the EU-members regarding General Data Protection. As a result, all gathering and processing of personal data became subject to a strict protocol. This protocol entailed the profound reassessment of the policies Dutch companies applied in concern with the privacy of their customers as well as their staff. In addition, the Data Protection Laws impose a considerable administrative burden on everyone who comes into contact with personal data. This now seems to affect the Dutch Tax Authorities too. 

General Data Protection
The European Union invoked several laws in order to protect personal data and avoid abuse.  All data that can directly or indirectly be traced to a natural person is considered personal data and must be handled with the utmost care. Therefore, the members of the European Union have adopted both international and national measures to safeguard their residents from possible identity theft or other forms of abuse. In its Data Protection Legislation, the Netherlands make reference to data that is especially sensitive. The national identification number or BSN falls under this sensitive data, since it serves as a natural person’s number for all contact with the government.  The gathering and processing of a BSN are hence subject to severe rules in order not to violate the privacy of the natural person the BSN represents. 

Tax Authorities skates on thin ice
For correspondence with the Dutch Tax Authorities, an individual fiscal number is assigned to every taxpayer. For natural persons, this number is their BSN. Here, using the BSN does not violate the General Data Protection laws, since the BSN is restricted to correspondence with the person in question. However, the BSN is also used as the fiscal number for one-man operations ran by sole proprietors and may thus be publicly available, for example in the records of the Chamber of Commerce. Moreover, this fiscal number also functions as the VAT number, which needs to be stated on all outgoing invoices. Such an application of a BSN as the fiscal number of an enterprise is thus in violation of the sole proprietor’s privacy.

Consequences
Because the Tax Authorities do not respect the General Data Protection, the AP (the Authorities in charge of Personal Data Protection) has set a deadline in which the Tax Authorities can settle the issue. If the problem has not been solved by January 1st, 2019, though, the AP will levy a fine or even prohibit the processing of the BSN the fiscal number of one-man operations. Nevertheless, the State Secretary of Finance has already indicated that making the deadline will be unlikely. Although he will take the matter under consideration, the State Secretary requested a transition period. 

If and when the Dutch government and its Tax Authorities will be able to rectify this privacy violation, remains yet to be seen. 

Do not hesitate on contacting us for more information about the fiscal aspects of a one-man operation.

 

Dividend tax exemption: what are the (regulatory) constraints?

The first of January 2018 was the effective date of expansion of the Dutch dividend tax withholding regime. It was also the date of duty notification being imposed regarding the application of the taxation exemption in respect of dividends paid out to non-Dutch based recipients. This blog discusses said newly introduced duty of notification by elaborating on the following themes: “Dividend tax specification”, “Dividend tax exemption conditions”, “Abuse of dividend tax exemption” and “Artificial construction in connection with dividend tax”.

Dividend tax specification
It is compulsory within one month of the dividend payment date to notify the Dutch Tax Authorities accordingly – using the designated “Dividend tax specification” form – where use is being made of the dividend tax withholding exemption. The Tax Authorities use the relevant information in assessing whether the distributing company or holding cooperative has rightly availed itself of withholding exemption. Please note that the tax authorities are authorised to impose default surcharges of up to € 5,278 each for tardy notification or failure altogether to effect notification, as well – worse still – as negligence penalties for intent or gross culpability, in amounts of up to 100% of the outstanding taxes. (Whether or not the tax service’s practice in this respect is entirely EU proof remains to be seen. Then again the institution of proceedings to find out can be a costly affair.)

The following information is required to be filled in using the designated “Dividend tax specification” form, for subsequent filing within one month of the dividend payment date.

Information pertaining to distributing company or holding cooperative:
details concerning the distributing company or holding cooperative;
the nominal value of the paid-in capital;
the number of voting shares held by the tax payer in question;
the aggregate amount in exempted dividend payments;
the precise dividend payment date.

Information pertaining to beneficiary:
beneficiary’s name, address and state of residence;
share of nominal value of the distributing company’s paid-in capital;
number of voting shares in the distributing company’s capital;
percentage of voting rights in the distributing company’s capital;
disclosure as to whether Section 4(9) or 4(10) of the Netherlands Dividend Tax Act 1965 (on the topic of hybrid entities) applies. If it does, this will require the names of the underlying participants (ultimate beneficiaries or UBO’s) rather than that of the recipient entity being included in the “Dividend tax specification” form.

The person having completed the “Dividend tax specification” form is required at the bottom of the form to confirm on behalf of the distributing company that the full complement of conditions as per Sections 4(2), 4(3) and 4(4) of the Dividend Tax Act have been complied with.

Dividend tax exemption conditions 
Dividend tax exemption will only granted if the following conditions are met. The beneficiary must be established (i) in any one of the EU Member States, (ii) in any one of the EEA Member States, or (iii) in any country with which the Netherlands has concluded a double taxation convention of which a dividend clause forms part. The participation exemption or holding compensation applies to any such payments as accrued to the beneficiary. No abuse may be involved (as would be the case where tax evasion had been (one of) the principal goal(s) of the set-up in question); a subjective and an objective test are required to be carried out to assess whether or not there has been any question of abuse.

Abuse of dividend tax exemption
The subjective test is used to assess at the moment of payment whether the tax charge to be paid by the entity having dividend entitlement has turned out lower than that due and payable by the underlying entity (entities) had the Dutch-based intermediate holding entity or holding cooperative not formed part of the construction. That said, it is not until the cumulative objective test has confirmed the construction in question as artificial that the assumption of dividend tax exemption abuse is made.

Artificial dividend tax construction
The objective test is used to determine the artificiality (or sincerity) of the construction or transaction in question. If the arrangement is found to have lacked valid commercial reasons reflecting the actual situation, this could be interpreted as a sign of artificiality. Carrying on a material business venture at the level of the entitled entity is accepted as a valid commercial reason, nor will the construction be dismissed as artificial where the entitled entity has been acting as a link and has been found to be fully substance requirement compliant. In another one of our blogs, we list the substance requirements predating the implementation of the tax withholding exemption. Two additional requirements were added on the occasion of the broadening of the tax withholding exemption, in that it was made compulsory for the beneficiary (i.e., the direct shareholder in or cooperative member of the Dutch entity) (i) to have its own office space for a minimum 24-month term and (ii) meet the wage bill criterion (typically to the tune of €100,000). The beneficiary’s compliance with the full complement of pre-existing and newly introduced substance requirements confirms it as having passed the objective test, which opens the door to it claiming tax withholding exemption.

Please do not hesitate to contact us if you have any questions or comments regarding the above, or if you are keen to find out whether your construction is in alignment with the latest conditions for laying claim to tax withholding exemption.

Jimmy Cox,
Tax Consultant at DTS Duijn’s Tax Consultants.

 

Cross-Border Constructions

March 13th, 2018, the members of the European Union reached agreement on cross-border constructions. The bill, which will go into effect as of 2020, aims to facilitate the distinction between international taxation and tax avoidance.  For now, we provide you with an elaboration on the procedure and what this entails. 

Cross-border constructions
Numerous entrepreneurs with ambitions that cross the borders of their beloved country, embark on cross-border constructions. These constructions consist of two or more entities or bodies, established in different countries inside and/or outside the European Union. Together, they constitute a fiscal unity. Hence, they are considered as one company for fiscal purposes. 

Duty of notification
Since honorable goals do not always motivate the foundation of said constructions, Europe now imposes a duty of notification. Starting July 1st, 2020, tax advisors, accountants, and intermediaries are thus obliged to report cross-border constructions pursuing tax advantages rather than an international market. Moreover, the duty of notification also applies to all cross-border constructions established after June 25th, 2018. Information on these maleficent constructions will be gathered in an international database, to which all European members will have access by October 2020. The European Union hereby intents to intervene before the roads of justice are deserted. In addition, Europe aspires to deter entrepreneurs of such opportunistic tax planning. 

Consequences
From a legal point of view, there is no objection to fastening the belt of justice. From a fiscal point of view, on the other hand, such an enhancement actually creates legal opacity. 

Isn’t it true that every tax advisor, accountant or intermediary aims to provide fiscal advice to the benefit of his or her client; within the law, nonetheless? Aren’t smart tax planning and tax advantage, in their very nature, intertwined? Should, therefore, all advice, no matter how decent or honorable, be reported? No. 

Yet, the duty of notification is desirable when the mind behind the ‘smart tax planning’ shoots for the loopholes of justice. In this case, the ‘beautiful mind’ in question does not remain within the borders of the law in planning a cross-border construction. 

In the future, tax advisors, accountants, and intermediaries should, therefore, be critical with regards to not only their customers, their own work as well. Moreover, with this quest for a justice, they also contribute to the employment and social welfare of Europe. Indeed, just like the new KYC (Know Your Client) and AVG (Algemene Vordering Gegevensbecherming or General Data Protection) legislation did, the agreement will in practice entail a great deal of administration. Within no time, this new addition to the workload will require a proper back office team to channel the rigmarole. But who will assess the honorable rather than opportunistic aspirations of these new employees?

Please do not hesitate to contact us for more information or for advice in planning your cross-border construction within the law. 

The advantage of fiscal unities over cross-border groups

In Europe, parent companies are able to form a group with their subsidiaries and/or operating companies. If those companies are established in the same country as their parent, the group may also form a fiscal unity. Hence, they are regarded as one body for fiscal purposes, rather than an aggregate of different but related bodies. This entails a significant advantage over cross-border groups, which cannot form such fiscal entity. Hence, they all must declare taxes separately. This difference has become a sore point, especially with regards to the European treatment of the deduction of interest and anti-money laundering.

Deduction of interest
In a group, a parent company can get a loan in order to make a contribution to a subsidiary. If this subsidiary is established in the same EU member as the parent company and they form a fiscal unity (hereinafter referred to as “FU”), the interest on this loan is deductible. A foreign subsidiary, however, cannot be included in the FU. Therefore, the contribution, as well as the loan, is seen as separate transactions and interest may not be deductible under the scope of Article 10a VPB(i), designed to avoid illegal transactions. The legislation can thus be seen as a limitation on the freedom of establishment. 

When the matter came to the attention of the Dutch Supreme Council, they set out the following preliminary questions to the Court of Justice (HR, June 8th, 2016, nr. 15/00195 and 15/00878 (Groupe Sterial)). Should taxpayers, who cannot to form an FU with their foreign daughter, established elsewhere within the European borders, be entitled to the advantages of several elements of the FU regime? 
In the Netherlands, this approach is referred to as the Elementbenadering (Per Element Approach).

Per Element Approach
Objection
In its reply to the Supreme Council, the Court of Justice criticized not only the Per Element Approach but the FU regime altogether. The Court’s main objection is that the latter is not EU-proof since the benefits are restricted to domestic entities, as foreign group entities must be excluded from the FU. Second, by clustering into an FU, the domestic group may circumvent the limitations set out by Article 10a VPB. This facilitates laundering money and/or hide profit made within the group significantly.  

The FU law and its legislation are therefore in desperate need of adjustments. Acting on this wake-up call, the Dutch Lower House created a bill for the invoked emergency repairs. This bill is based on the Wegdenkgedachte or Disregard approach.

Disregard Approach
For several elements of the FU, the (trans)actions the domestic group should be assessed as if the FU does not exist. This results in one and the same treatment for domestic as well as cross-border groups. Furthermore, illegal acts and money laundering can be brought to light more easily. Whether or not the emergency repairs and the benefits they offer will go into effect, will be discussed in the second quarter of 2018. If the bill results in a new law, this law and its legislation will have a retroactive effect from October 25th, 2018; 11 a.m. CET and will only affect the elements listed below:

  • The deduction of interest and money laundering (Article 10a VPB)
  • Equity participations (Article 13.9 – 15 VPB and Article 13a VPB)
  • The hybrid financing regime (Article 13(17) VPB)
  • The deduction of  interest on participations (Article 13I VPB)
  • Trading loss and profit companies (Article 20a VPB)
  • The dividend withholding tax deduction of contributions concerning redistributions (Article 11(4) VPB)

Deduction of Interest
Key in this bill is overlooking the FU with respect to the deduction of interest as stipulated in Article 10a VPB. Within a fiscal unity, illegal transactions in order to launder money often remain transparent for fiscal purposes.  If the Dutch Tax Authorities have reasonable doubt to suspect that an FU engages in such illegal acts, resulting in a debt to a related entity excluded from the FU,  they will now disregard the FU altogether. This approach also applies to tainted loans within the FU. In these cases, interest that would not have been deductible for non-FU groups will now be added to the profit of the fiscal unity. 

Yet, obligations between the related entities are generally met with a so-called ‘evidence to the contrary regime’. This, in practice, comes down to a countervailing charge. 
 In addition, the Court of Justice and Lower House accommodate SMEs. They entitled to a transitional provision. In the following circumstances, the legislation with respect to the deduction of interest will only apply as of January 1st, 2019.

  • Debts made before October 25th, 2018; 11 a.m. CET. 
  • Interest or debt service charges do not amount to more than €100.000 per 12 months. In case this threshold is surpassed, the provision cannot be invoked anymore. 

 

Please feel free to contact us for more information. 

i. http://wetten.overheid.nl/BWBR0002672/2015-05-01/0

Buying property in Amsterdam

For everyone interested in buying property in the Dutch Randstad, it is a well-known phenomenon that the property values are increasing exponentially. Buying a house, therefore, becomes a true challenge, especially in Amsterdam. This, in turn, affects rental prices in the free real estate sector. These prices go up as well. As a result of this continuous upward trend, both companies and private individuals are drawn to real estate investments. 

Yet, we like to point out a couple of things to keep in mind: 

Taxation on rent, for one, is a complicated matter. Due to various factors (e.g. room vs. house, own property vs. spec house, separate entrance vs. common areas,  short-term vs. long-term leases, holiday rentals (AirBnB) vs. residential rentals… ), every situation differs. Are you entitled to a tax relief on lodging? Do facilities for entrepreneurs apply? Can you benefit from a VAT deduction? Is it possible to collect rent tax-free in box 3? Are you able to deduct the mortgage rate?
For each of these questions, there is a common answer: it depends on your particular situation. This can be assessed by DTS’ tax experts, who can provide you with improvements where appropriate.  
In addition, when purchasing real estate in the Amsterdam area, you often encounter practical as well as financial obstacles.  Popular apartments, for example, generally exit from the market in a matter of days. Hundreds of potential buyers outbid each other in a competition to get their hand on the much-desired property. Hence, the winning bid tends to be a shopping amount well above asking price. It is thus key to engage the right people, who know which properties will enter the market before they are publicly advertised. Moreover, getting the help of a real estate agent comes with several benefits. Your agent, for instance, visits the real estate of interest when you do not have the time to do it yourself. Furthermore, your agent can provide you with a professional assessment of the current value, a realistic rental value, and a future value. This assessment takes various factors into account, such as leasehold, isolation, the technical status, possibilities for remodelling, or even the foreseeable development of its neighbourhood. 
Lastly, time is money, not in the least when it comes to real estate. With every month, property values increase while the amount of square footage you can afford rapidly decreases. 

DBi consists of network of tax advisors, brokers, and real estate agents. You can thus benefit from our commercial ánd fiscal assistance. This enables you to swiftly purchase your dream property with ease at a favourable price. In addition, we can assist you to collect a proper real estate portfolio. Please feel free to contact us for more information on info@d-b-in.com