Netherlands: Implications of “Brexit” for Dutch taxpayers

Netherlands: Implications of “Brexit” for taxpayers

Voters in the United Kingdom on 23 June 2016 decided in favor of the UK leaving the EU. Given that “Brexit” will necessarily have major consequences for both the UK and the EU, it is expected that defining the terms and conditions of such a withdrawal will take at least two years and involve challenging negotiations on both sides.

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Impact for the Netherlands

At this stage, it is impossible to predict what the outcome of the negotiations will be. In a worst case scenario when, for example, all directives on direct taxation would no longer be applicable, taxpayers may seek protection under the Netherlands-United Kingdom income tax treaty (2008). The treaty, inter alia, grants tax exemptions in the source country with respect to interest, royalties, qualifying intercompany dividends, as well as capital gains that are derived as the result of a corporate reorganization, amalgamation, division or similar transaction. Furthermore, the treaty provides non-discrimination rules and for the resolution of cases by means of arbitration in instances when the competent authorities are unable to reach an agreement under the mutual agreement procedure within two years, at the request of the person who presented the case.

 

Read a June 2016 report prepared by the KPMG member firm in the Netherlands: Brexit: the tax consequences of the UK referendum

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