This is contribution number 13 by KPMG Meijburg & Co regarding Directors fees and the application of the exempt method.
Under several tax treaties (e.g. with Canada, France, Latvia, Mexico, Sweden, Venezuela, the United Kingdom and the 1992 treaty with the United States), a resident of the Netherlands, who receives remuneration in his capacity as a member of the board of directors or supervisory board of a company resident in the other contracting state, can claim a tax credit for the tax paid in the other contracting state with respect to the remuneration.
However, the Dutch Under Minster has announced that such taxpayers can request the application of the exemption-method (with progressive reservations). The request will be granted if the taxpayer demonstrates that tax has actually been paid in the other contracting state and that the director's fees are not subject to a more favourable regime in the other contracting state than income from employment.
The announcement applies retroactively as of 1 January 1994. A similar ruling already applied as of 1981 with respect to Dutch resident directors of UK companies. However, this ruling did not contain the 'favourable regime' requirement. The 1981 ruling will be revoked as of 1 January 1995.
This message is most likely to be relevant for directors and supervisory directors, resident in the Netherlands, with a directorate in another EU Member State.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Further information can be obtained from Mr Alfred GM Groenen, MCL, KPMG Meijburg & Co, Amsterdam (Netherlands); fax 31 (20) 656 1247.
Under several tax treaties (e.g. with Canada, France, Latvia, Mexico, Sweden, Venezuela, the United Kingdom and the 1992 treaty with the United States), a resident of the Netherlands, who receives remuneration in his capacity as a member of the board of directors or supervisory board of a company resident in the other contracting state, can claim a tax credit for the tax paid in the other contracting state with respect to the remuneration.
However, the Dutch Under Minster has announced that such taxpayers can request the application of the exemption-method (with progressive reservations). The request will be granted if the taxpayer demonstrates that tax has actually been paid in the other contracting state and that the director's fees are not subject to a more favourable regime in the other contracting state than income from employment.
The announcement applies retroactively as of 1 January 1994. A similar ruling already applied as of 1981 with respect to Dutch resident directors of UK companies. However, this ruling did not contain the 'favourable regime' requirement. The 1981 ruling will be revoked as of 1 January 1995.
This message is most likely to be relevant for directors and supervisory directors, resident in the Netherlands, with a directorate in another EU Member State.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Further information can be obtained from Mr Alfred GM Groenen, MCL, KPMG Meijburg & Co, Amsterdam (Netherlands); fax 31 (20) 656 1247.
