Netherlands: Innovation box regime approved by OECD | KPMG | GLOBAL

Netherlands: Innovation box regime approved by OECD

Netherlands: Innovation box regime approved by OECD

Following approval by the European Code of Conduct group, the Organisation for Economic Cooperation and Development (OECD) also concluded that the Dutch innovation box regime does not produce any harmful tax competition.

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Since July 2016, the OECD Forum on Harmful Tax Practices has investigated 125 preferential tax regimes in various countries.  The OECD forum, in a report produced following 12 months of evaluation, concluded that the innovation box regimes of 11 countries—including the Netherlands—did not produce any harmful tax competition. The OECD forum approval relates to a version of the innovation box that (for the most part) was introduced as of 1 January 2017, and was included in the 2017 Tax Plan.

KPMG observation

These confirmations from the European Code of Conduct Group and the OECD Forum on Harmful Tax Practices that the Dutch innovation box is internationally acceptable, do not make any statement about potential EU state aid. In 2014, the European Commission announced that as part of its state aid investigation into the ruling practices of EU Member States, it would also investigate preferential regimes for income from patents and innovation. In light of the above approvals, it seems likely that, for the purposes of this state aid investigation, the Dutch innovation box regime may no longer be regarded a priority for EU state aid. However, the European Commission is expected to continue to monitor the possible presence of prohibited state aid in individual cases. This could, for example, occur if a tax ruling of the Dutch tax authorities grants a benefit to the taxpayer based on an overly broad application of legislation and regulations.   

 

Read a July 2017 report prepared by the KPMG member firm in the Netherlands

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