Temporary transitional law mutual funds

As of 1 January 2025, the definition of a mutual fund (“fonds voor gemene rekening”) has been amended. This has resulted in certain investment funds, particularly partnerships, which were previously tax transparent, becoming tax non-transparent as of 1 January 2025 if they meet the (new) mutual fund conditions. The non-transparency for tax purposes does not apply to funds whose participations can in principle only be sold to the fund itself (repurchase fund). A transitional measure is already in place, under which funds have been given until 1 January 2026 to make the transition to a repurchase fund, subject to certain conditions.

However, due to remaining issues that have been identified, a temporary transitional measure is now also being proposed, pending a possible new definition of the mutual fund. Under the proposed transitional measure, entities that would become taxable in the Netherlands as of 1 January 2025 and that qualified as tax transparent on 31 December 2024 may, under certain conditions, choose to remain tax transparent and thus temporarily not to be classified as mutual fund. This will prevent short-term independent tax liability for this specific situation. The possible change to the mutual fund definition will take effect on 1 January 2027 at the earliest. The transitional law will apply until this new definition takes effect, but no later than 1 January 2028.

Adjustment to minimum capital rule

The minimum capital rule is a specific interest deduction limitation rule in the Dutch Corporate Income Tax Act for banks and insurance companies, intended to achieve a more equal treatment of equity and debt capital, in line with the general interest deduction limitation rule in article 15b of the Dutch Corporate Income Tax Act.

As of 1 January 2024, this measure includes an exception for interest expenses on debts to group entities, which are common among banks and insurance companies. Under certain conditions, these interest expenses will fall outside the scope of the minimum capital rule, meaning that they will not be subject to the deduction limitation. This exception for internal liquidity management appears to also apply, unintentionally, to loans directly related to loans obtained from individuals (such as deposits). It is proposed that, for financial years starting on or after 1 January 2026, such situations will be excluded from the exception for internal liquidity management.

Measures on the lucrative interest regime

Gains from an indirectly held lucrative interest (“lucratief belang”) may, at the taxpayer’s request, be taxed in Box 2 instead of being treated as income from other activities (“resultaat uit overige werkzaamheden”) in Box 1. The condition is that at least 95% of the lucrative interest gains realised in a calendar year are distributed as income from a substantial interest (“aanmerkelijk belang”). The government proposes to broaden the tax base for income from an indirectly held lucrative interest by applying a multiplier. As a result, the effective tax burden on such lucrative interest gains will increase from 24.5% to 28.45% for gains taxed at the first rate bracket of Box 2, and from 31% to 36% for gains taxed at the second rate bracket of Box 2. This measure is not limited to lucrative interests held by private equity managers but extends to all qualifying interests.

Announced adjustment to hedging of currency results

Following a judgment by the Supreme Court earlier this year on the liquidation loss scheme, there is now a risk that losses could be taken into account twice. In order to close this budgetary gap, the tax treatment of results on currency risk hedging instruments is to be adjusted as of 1 January 2027. Currently, the costs of the hedging instrument are still fully deductible, while the expected profit is exempt or the expected losses are non-deductible. The legislator has indicated that it considers it important to allow a deduction only if there is a corresponding levy. The exact form of the adjustment is still unclear. The announced changes will be submitted for internet consultation.

The Second Bill amending the Dutch Minimum Tax Act 2024 proposes a number of amendments to align the Dutch Minimum Tax Act 2024 (“DMTA 2024”) with the latest Administrative Guidances (“AG”) as issued by the Organisation for Economic Co operation and Development (“OECD”). A large portion of the proposed changes concern AGs published up to, most recently, last January. It appears that the proposed changes are the last remaining elements that require changes to the legislation. Elements that are not explicitly codified in legislation are, in the legislator’s view, already applicable in the DMTA 2024, given that they are of interpretative nature and that Directive 2022/2523 provides for a dynamic applicability of such interpretative guidance. The bill also contains technical improvements, such as clarifications and corrections of cross references.

The choice has been made to give as much retrospective effect as possible to AGs that are favourable to taxpayers, and to incorporate other AGs for reporting periods beginning on or after 31 December 2025. It can be questioned whether this objective is in fact achieved for certain retroactive changes. This choice also raises the question of how to deal with a provision that changes from one year to the next where the change is not fully retrospective. For example, it remains unclear how a provision should be treated in the period preceding the effective date of a legislative amendment.

Certain more technical AGs are not dealt with in the bill itself. Instead, delegative acts are introduced. Finally, it is worth noting that the implications of the G7 statement with respect to the United States are not addressed in the documents; we refer to our alert for a further explanation.  

The Bill implementing the EU Directive on the exchange of top-up tax information returns seeks to amend the Dutch Bill on International Assistance in Taxation Matters and the DMTA 2024 to implement Directive (EU) 2025/872 (commonly referred to as ‘DAC9’). That directive governs the automatic exchange of top up tax information returns between Member States in relation to the minimum tax.

The bill facilitates the ability for groups to file a single central top up tax information return in only one EU Member State, rather than in every Member State. The Member State of filing then distributes the relevant parts to other Member States to the extent required under DAC9. Thus, certain parts of the top up tax information return will not be shared with Member States that do not have taxing rights over the profits of a particular jurisdiction. The proposed act is intended to enter into force on 1 January 2026.

DAC9 is based on the Multilateral Competent Authority Agreement published by the OECD. The Netherlands is also a party to that agreement. That agreement enables automatic exchange of top up tax information returns between the Netherlands and non EU jurisdictions.