NETHERLANDS Law and Practice Contributed by: Michael Molenaars, Jeroen Smits, Reinout de Boer and Rogier van der Struijk, Stibbe
6.4 Taxation of Intangibles Developed by Local Corporations Group transactions in the Netherlands adhere to the arm’s length principle (including amendments to the transfer pricing guidelines under the BEPS project, such as in relation to hard-to-value intangibles), so the use of locally developed intangibles by non-local subsidiaries should trigger Dutch corporate income taxation. If the intangibles are going to be developed under the innovation box, the qualifying income (a capital gain or a licence fee) may be taxable at an effective tax rate of 9%. 6.5 Controlled Foreign Corporation-Type Rules As part of the implementation of ATAD, the Neth - erlands introduced a controlled foreign companies (CFC) regime on 1 January 2019. Under a somewhat CFC-like rule, in the case of share - holdings of at least 25% in foreign companies that are not taxed reasonably according to Dutch standards and in which the assets of the company are portfo - lio investments or assets that are not related to the operational activities of the company, the sharehold - ing should be revalued at fair market value annually. The gain recognised as a result of this is subject to corporate income tax at the standard rates. See also 9.1 Adoption of BEPS Recommendations . Assuming that passive activities led to the recognition of a PE, the income that can be allocated to that PE should not be exempt, as the object exemption is in principle not applicable to low-taxed passive invest - ments. 6.6 The Substance of Non-Local Affiliates In general, no specific substance requirements apply to non-local affiliates (except for the CFC rules). In a broader sense, low substance of non-local affiliates could trigger anti-abuse rules (eg, non-application of the participation exemption due to which inbound div - idend income may be taxable, the annual mandatory revaluation of low-substance participations against fair market value, etc).
Furthermore, under certain corporate income tax and DWT anti-abuse rules, shareholders of Dutch interme - diary holding companies, subject to certain require - ments, should have so-called relevant substance and perform relevant economic activities, including that shareholders must use an office space for at least 24 months that is properly equipped to perform holding activities, and wage expenses of at least EUR100,000 should be incurred by the shareholder. Abuse of EU Law It must be emphasised that following the CJEU cases of 26 February 2019 on the PSD and on the Interest and Royalties Directive, the Netherlands, being an EU member state, is obliged to target “abuse of EU law”. The assessment of whether a structure or investment may be considered “abusive” is made based on an analysis of all relevant facts and circumstances. There are no legal safe harbour or irrefutable presumptions. Consequently, from 1 January 2020, the presence of substance will only play a role in the division of the burden of proof between the taxpayer and the tax authorities. If the substance requirements are met, this will lead to the presumption of “non-abuse”, which is respected, unless the tax authorities provide evidence to the contrary. If the substance requirements are not met, the taxpayer is allowed to provide other proof that the structure at hand is not abusive. The Dutch Supreme Court rendered two decisions in 2025 on the application of the EU anti-abuse rules in the context of the Dutch domestic DWT exemp - tion. One of the entities involved was an active hold - ing company with own office space, incurring man - agement fees and actively managing a portfolio of investments. Nevertheless, the Dutch Supreme Court denied the application of the domestic DWT exemp - tion as the particular investment in the Dutch entity was not held as a business asset. 6.7 The Sale of Shares in Non-Local Affiliates Capital gains derived from the alienation of a qualifying shareholding in a foreign company by a Dutch com - pany are fully exempt from Dutch corporate income tax if the participation exemption is applicable (see 2.7 Capital Gains ).
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