The Dutch Tax Plan 2013 and accompanying legislation contain a
myriad of minor changes and amendments to Dutch tax legislation,
but also two major changes to the Dutch Corporate Income Tax Act
1969. Both of these changes relate to the deductibility of interest
payments, and are particularly relevant in the context of
cross-border transactions and reorganizations. The changes entered
into force on January 1, 2013, and will be discussed in further
detail below.
Out with the old: termination of thin capitalization
regime
The Dutch general thin cap regime has been terminated. Prior to
2013, the Dutch Corporate Income Tax Act 1969 contained a provision
that restricted the permissible debt-to-equity ratio (generally,
the acceptable ratio was 3:1 for domestic corporate taxpayers).
Interest payable on debt in excess of this ratio was generally not
deductible for corporate tax purposes. However, the provision was
found to adversely impact taxpayers that were not otherwise
