Proposed Changes To Dutch Entity Tax Classification Rules – New York Office Snippet

Loyens & Loeff New York regularly posts 'Snippets' on a range of EU tax and legal topics. This is our latest Snippet on the proposed changes to the Dutch entity tax classification rules.

The Netherlands has unique rules when it comes to the classification of foreign entities and limited partnerships ("LPs") for tax purposes. LPs are only considered transparent for Dutch tax purposes in case the admission and substitution of limited partners is subject to the prior unanimous consent of all (i.e., both limited and general) partners. This requires specific provisions in the LP agreement, which need to be adhered to in practice. In the absence of such provisions, which is normally the default, (Dutch and non-Dutch) LPs are considered opaque for Dutch tax purposes.