New Knowledge Document On Transaction Costs

Costs relating to an acquisition or sale of a participation ("transaction costs") are not deductible under Dutch tax law (participation exemption).

On 1 February 2024, the Tax Authorities published an updated knowledge document regarding transaction costs following Supreme Court cases. In these so-called "December cases", the Supreme Court provides direction on the meaning of transaction costs. Despite this clarification, the cases also raise questions. This knowledge document from the Tax Authorities attempts to provide guidance in on the definition of transaction costs.

Before the qualification of transaction costs can be made, it needs to be determined to which company these costs should be allocated. The so-called 'benefit test' is key to assess this allocation. The benefit test focuses on which entity benefits from the activities and/or revenues that incurred the costs. The motive behind the costs may be taken into consideration, as well as who is usually