EU Tax Developments

EU Consultation on DAC Recast

The European Commission has opened a call for evidence and public consultation on revising the Directive on Administrative Cooperation (DAC). This initiative, which is part of the programme to simplify EU law and reduce administrative burdens, follows the June 2025 evaluation of DAC1–DAC6, which highlighted challenges such as complexity and fragmented implementation. The European Commission is considering consolidating DAC1–DAC9 into a single instrument and introducing targeted reforms to streamline reporting, improve the functioning of DAC6, enhance taxpayer identification and IT interoperability and improve data quality. A legislative proposal is expected in Q2 2026.

Estonia Urges EU to Rethink Pillar 2 Implementation

Estonia’s Ministry of Finance has voiced strong concerns to the European Commission about the EU’s mandatory implementation of the Pillar 2 Directive, particularly for smaller EU Member States. The letter highlights the impact of the Pillar 2 Directive on the competitiveness of EU, and that the rapid legislative changes and developments at OECD level cannot automatically become part of EU law. Estonia warns that this increases legal uncertainty, and imposes disproportionate administrative burdens, especially given the limited expected revenue for EU Member States. The Ministry urges the EU to consider suspending or amending the Directive, or granting permanent derogations for countries with few ultimate parent entities. We further note that the recently published Pillar 2 Side-by-Side Package of the OECD will be covered in our Monthly Recap for January 2026.

Portuguese Withholding Tax Exemption for Foreign Pension Funds

The CJEU ruled on Portuguese legislation that requires non-resident pension funds to provide a declaration certified by the supervisory authority of their jurisdiction of residence as a condition for obtaining an exemption or refund of Portuguese withholding tax on dividends. More specifically, whether this condition is compatible with the free movement of capital. According to the CJEU, this condition is (shortly put) allowed when claiming an immediate withholding tax exemption at source provided the jurisdiction’s supervisory authority has the necessary powers and competences to issue the declaration and the declaration can be obtained within a reasonable period, and provided there are no equally effective but less restrictive measures. The CJEU also ruled that the right to free movement of capital precludes an EU Member State like Portugal from requiring such a declaration as the sole means of proof of the substantive conditions when claiming a withholding tax refund.

Dutch Tax Developments

Update of the Fund Decree

The Dutch State Secretary for Finance published an updated decree clarifying the definitions of ‘fund for joint account’ (FGR) and ‘transparent fund’ for Dutch tax purposes. The revised Fund Decree elaborates on when a fund is presumed an ‘investment fund’ within the meaning of the Dutch Financial Supervision Act, which is the case when the fund manager registers the fund as such with the Dutch Financial Market Authority (AFM) or a comparable authority in another EU Member State. The Decree also introduces safe harbour rules for investments into loans to qualify as ‘normal portfolio management’. The Decree further clarifies how ‘normal portfolio management’ should be tested when investing in transparent funds, when family funds fall outside the scope of the FGR definition and how ‘tradeable participation rights’ should be assessed.

Amendment of the FGR Definition

The Dutch Ministry of Finance published a legislative proposal for public consultation to amend the definition of ‘fund for joint account’ (FGR) and introduce an optional opt-out regime. The proposed changes seek to align the FGR definition more closely with definitions included in the AIFMD and UCITS Directives, which would also provide certainty that partnerships with legal personality can qualify as an FGR. A ranking rule would be introduced to ensure that an entity subject to Dutch corporate income tax based on its legal form (e.g., a BV, NV or comparable foreign entity) cannot also qualify as an FGR. The opt-out regime would allow qualifying FGRs with up to 20 ultimate investors to be treated as tax transparent, subject to specific requirements (e.g., strict investor reporting and a one-time election requirement) and a deemed disposal mechanism upon shifting from a tax opaque FGR to a transparent fund, and vice versa. The consultation is open until 2 February 2026, with any legislative changes expected to take effect from 1 January 2027.

Abuse of Law Doctrine and Interest Deductibility

The Dutch Supreme Court (shortly put) clarified when interest on a related party loan used to finance the acquisition of a participation should be considered non-deductible under the abuse of law doctrine. We note that the Dutch taxpayer and the acquired participation entered into a fiscal unity for Dutch CIT purposes. The Supreme Court confirmed, in line with previous case law, that the deduction of such interest should be denied under the abuse of law doctrine – even when the anti-base erosion interest deduction limitation does not apply – unless the loan is raised from a group entity with a ‘pivotal financial function’. The Supreme Court further clarified that the abuse of law doctrine should in principle not apply to the extent that the related party loan is used to refinance existing debt at the level of the participation.

Structured Use of Pre-Fiscal Unity Tax Losses

The Dutch Supreme Court ruled, concerning a specific fact pattern, that pre-fiscal unity tax losses can be offset against profits of a BV that was added to the fiscal unity. In this case, a fiscal unity for Dutch CIT purposes reported tax losses, and subsequently added a profit-making BV to the fiscal unity. As a result, the existing tax losses became ring-fenced as so-called pre-fiscal unity tax losses (i.e., tax losses attributable to the period before the inclusion of the profit-making BV) and could thus (shortly put) only be offset against future profits of the fiscal unity excluding profits attributable to the profit-making BV. The fiscal unity subsequently incorporated a new BV, added this new BV to the fiscal unity and merged the profit-making BV into this new BV within the fiscal unity. The Supreme Court ruled that the pre-fiscal unity tax losses could (effectively) be offset against the taxable profits of the profit-making BV following the merger, subject to certain amortisation and depreciation corrections. The abuse of law doctrine was not considered applicable.

VAT Treatment of Solar Roof Installations

The Knowledge Group of the Dutch Tax Authority published a new position paper in relation to the VAT treatment of non-integrated solar roof systems. The guidance stipulates that leasing such systems – comprising solar panels, mounting structures, cabling, and inverters – qualifies as the lease of movable property for VAT purposes and is subject to 21% VAT. However, the same installations may be considered immovable property under Dutch civil law according to the position paper. Although not specifically addressed in the position paper, this could potentially trigger RETT upon transfer. This potential dual classification has important implications for structuring solar energy investments and lease arrangements.

EU Tax Developments

European Parliament Adopts Position on BEFIT

The European Parliament adopted its position on the BEFIT (Business in Europe: Framework for Income Taxation) Directive-proposal, which sets out a common framework for corporate income taxation within the EU. The position adopted includes various amendments to the BEFIT Directive-proposal published by the European Commission in 2023, including (amongst others) anti-abuse rules for royalties and passive income, accelerated depreciation for assets that support EU goals in climate, social, digital and defence areas, and limits on loss carry-forward. BEFIT aims to simplify compliance, enhance fairness, and reduce tax planning opportunities. BEFIT is scheduled to apply to fiscal years starting on or after 1 July 2028. This would first require unanimous vote by all EU Member States through the European Council.

Second Evaluation of the DAC

The European Commission released its second evaluation of the Directive on Administrative Cooperation (DAC), covering 2018 to 2023 and assessing its effectiveness, efficiency, coherence, relevance and EU added value. The report concludes that the DAC remains a robust and effective framework for tax transparency and cooperation but highlights areas for improvement, including simplification, harmonisation, better penalties, enhanced data use and digital transformation. Specific concerns relate to DAC6’s complexity and fragmented application across the EU. Looking ahead, the European Commission intends to recalibrate the DAC6 hallmarks, explore integration of ATAD3, issue EU-level guidance for the interpretation and application of DAC6 provisions, and improve data reconciliation. A proposal to recast the DAC is expected in Q2 of 2026.

Lack of Standing in Challenge to EU Pillar 2 Directive

A Dutch multinational company operating under a specific Dutch tax regime for shipping challenged a specific requirement under Article 17 of the EU Pillar 2 Directive and the absence of grandfathering rules. In short, the company argued that the Directive leads to a higher tax burden, which it was not able to consider when making historic business and investment decisions. Article 17 of the Directive (shortly put) excludes international shipping income provided the entity demonstrates that the strategic or commercial management of all ships concerned is effectively carried on within the jurisdiction where it is located. The CJEU (shortly put) ruled that benefiting from a favourable domestic tax regime does not create a direct or individual concern, which is required for an annulment action under Article 263 TFEU. The CJEU thus rejected the multinational’s request for annulment, holding that the company lacked standing.

VAT Exemption for Mortgage Contract Intermediary Services

The CJEU clarified that a set of preparatory and administrative actions may fall within the scope of ‘credit intermediation’ when these, taken together, enable or facilitate the conclusion of credit agreements. This applies even where the intermediary has no authority to act on behalf of the lender, does not influence the contractual terms, and the client remains free to choose the lender. Furthermore, the fact that remuneration consists of a commission payable only upon actual conclusion of the contract, weighted by the quality of the files, supports the view that the services are genuinely aimed at bringing about the credit agreement. This allows for a broad scope of the VAT exemption.

Dutch Tax Developments

Lucrative Interests and Box 2

Earlier this year, a legislative proposal was submitted to effectively increase the Box 2 personal income tax rates for indirectly held lucrative interests (e.g., sweet equity and carried interest) with effect as of 1 January 2026. The increased effective tax rates are 28.45% for the first € 67,804 of income (up from 24.5%) and 36% for excess income (up from 31%). The Dutch Parliament has voted in favour of a two-year postponement of this (effective) increase in Box 2 taxation until 1 January 2028. At the same time a motion was adopted to abolish the possibility for private equity managers to have their lucrative interest taxed in Box 2 (instead of Box 1).

Deemed Income Rate for Other Assets in Box 3

Earlier this year, a legislative proposal was submitted to broaden the Box 3 taxable base for personal income tax purposes by increasing the deemed income from “other assets” (i.e., assets other than cash) from 5.88% to 7.78% and by reducing the tax-free base from € 57.684 to € 51.396. The Dutch Parliament has now voted to adjust the personal income tax rate for other assets to 6% (instead of 7.78%) and to increase the tax-free base to € 59.357 for the year 2026. Taxpayers with lower actual returns from their savings and investments can still provide counter-evidence and request for a correction to lower their Box 3 personal income tax due.

Extension of Grandfathering Rules for Funds for Joint Account

Under the Dutch tax entity classification rules that became effective on 1 January 2025, a limited partnership (LP) is in principle transparent for tax purposes, unless it qualifies as a so-called fund for joint account (FGR). Earlier this year, the Dutch Ministry of Finance announced that the definition of FGR will be amended to mitigate that certain investment fund LPs qualify as tax opaque. Simultaneously, a legislative proposal was submitted to extend existing and to introduce new grandfathering rules for Dutch and foreign LPs that were tax transparent prior to 1 January 2025 and want to continue that classification. The grandfathering rules, shortly put, allow these LPs to remain tax transparent during 2025, 2026 and (possibly) 2027 as long as broader legislative amendments are pending regarding the FGR definition. The Dutch Parliament has now voted to expand these grandfathering rules to also cover LPs that were established after 1 January 2025.

VAT Treatment of Property Transfers by Project Developers

The Dutch Supreme Court referred various questions to the CJEU to clarify the VAT treatment of certain property transfers by project developers. The case involved the transfer of newly built apartments together with existing lease agreements to an investor. The questions raised by the Supreme Court aim to clarify when such a transfer can qualify as a transfer of going concern (TOGC) for VAT purposes. Under the TOGC regime, no VAT is charged on the purchase price which is beneficial when the property is leased out VAT exempt. The outcome of this case could have significant implications for real estate transactions and VAT planning in the Netherlands and across the EU.

Real Estate Funds and the Internal Reorganisation RETT Exemption

A transfer of real estate or shares in a real estate company within the same group of companies can be exempt from real estate transfer tax (RETT) under the so-called internal reorganisation exemption. A group in this respect (shortly put) consists of the parent company and all companies in which that parent company holds a (shareholding) interest, directly or indirectly, of at least 90%. The Advocate General has advised the Dutch Supreme Court on the scope of the term “interest” in a real estate funds context. More specifically and simply put, whether a fund manager that only owns the legal title of shares of a company (without being entitled to any economic benefits) can be considered part of the same group as that company. The Advocate General concludes that the term interest was introduced to ensure that the exemption only applies where a group exists from an economic perspective. If a significant risk related to value changes of the shares rests with parties other than the fund manager and the proceeds go to parties other than the fund manager (i.e., the unitholders in the fund), then in view of the Advocat General and according to the intention of the legislator, the fund manager is not sufficiently integrated with the underlying company economically to form a group for the purposes of this RETT exemption.

EU Tax Developments

EU Blacklist

The European Commission announced that EU Member States have not made any changes to the list of non-cooperative tax jurisdictions (i.e., the so-called “EU Blacklist”). The list currently comprises eleven countries: American Samoa, Anguilla, Fiji, Guam, Palau, Panama, Russia, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.

2026 Work Programme

The European Commission published its 2026 Work Programme with a clear focus on simplification, competitiveness and enforcement. The European Commission expects to publish an Omnibus on Taxation in the second quarter of 2026 with simplification proposals designed to address interactions between different pieces of EU legislation (in particular the Directive on Administrative Cooperation). The European Commission also plans to withdraw several pending tax proposals, including (amongst others) the Unshell Directive, DEBRA Directive and TP Directive, whilst prioritising the BEFIT Directive and the HOT Directive.

Dutch Tax Developments

Elections in the Netherlands

Following the elections, the coalition negotiations are about to kick off. Based on party programs and public statements of likely coalition candidates, we expect the direction of travel to involve moderate tax adjustments rather than radical reforms. Likely measures include increased progressivity in Box 1 of the personal income tax system (i.e., multiple brackets and a higher top rate), environmental and consumption-based levies (such as sugar tax), and tightening of corporate deductions (e.g., the earnings stripping rule and tax loss compensation), and possible curtailment of the expat regime known as the 30%-ruling. Significant changes such as increasing the personal income tax rates for Box 2 or corporate income tax rates seem unlikely.

Interest on Tax Due

The Dutch Advocate General has advised the Supreme Court to declare the Decree on Tax and Collection Interest non-binding, potentially leading to a reduction in the applicable tax interest rates retroactively from October 2020. The Advocate General (shortly put) argues that the 8% interest rate for CIT purposes over the years 2022 and 2023 is disproportionate and recommends to align this rate to the lower statutory interest rate for non-commercial transactions. Taxpayers are advised to review tax assessments that include interest on tax due and consider filing an objection to safeguard their rights.

Cross-Border Conversions

The Dutch Ministry of Finance launched a public consultation covering a legislative proposal to clarify the tax implications of cross-border conversions with a Dutch nexus. The rules for domestic conversions will (shortly put) be extended to cover cross-border conversions and conversions under foreign or EU law. The main rule is that a conversion is a deemed liquidation of the entity, followed by a deemed distribution by this entity and subsequently followed by a deemed contribution by the participants of the entity back into the converted entity. The main rule should (again, shortly put) generally not apply where there is no risk for the Dutch government of losing a (latent) Dutch tax claim.

US REITs and Pillar 2

The Dutch tax authorities published an anonymised summary of a tax ruling confirming (amongst others) the qualification of a US REIT as a Real Estate Investment Vehicle (REIV) for Pillar 2 purposes. REIVs and their qualifying subsidiaries are excluded from the scope of Pillar 2.

VAT Exemption on Negotiation Activities Concerning Shares

A new Decree clarifies the scope of the VAT exemption for intermediation in share transactions. Previously, the Dutch tax authorities applied inconsistent approaches. The Decree aims to harmonize interpretation. If the service brings two parties together to close a share sale, the VAT exemption applies. Parties such as corporate finance advisors and investment banks should re-assess whether their VAT treatment aligns with this Decree, especially if they currently charge 21% Dutch VAT.

EU Tax Developments

VAT Consequences of TP Adjustments

The CJEU addressed whether transfer pricing payments between related companies constitute VAT-taxable services. The CJEU ruled that intercompany payments based on a contractual agreement, including payments intended to primarily align profits with the at arm's length principle using the Transactional Net Margin Method, can qualify as a payment for a service. The CJEU further confirmed that tax authorities may require additional documentation beyond invoices to verify the right to deduct VAT in this respect.

BEFIT

The European Parliament’s Economic and Monetary Affairs Committee has adopted its position on the European Commission’s proposed BEFIT-Directive published on 12 September 2023. BEFIT sets out a common framework for corporate income taxation within the EU. The position adopted by the Committee includes amendments to the proposed BEFIT-Directive, mainly consisting of anti-avoidance measures (e.g., an economic presence clause, royalties limitation rule and profit shifting prevention), as well as an accelerated asset write-off mechanism. The next step will be that the Committee’s amendments are put to a plenary vote in the European Parliament, which is expected to take place in November.

Dutch Tax Developments

Budget Day

On Tuesday, 16 September, it was Budget Day in the Netherlands. Some of the most notable tax measures that were submitted for Parliamentary approval with a targeted effective date of 1 January 2026 are:

Investment Fund LPs – To extend existing and introduce new grandfathering rules for Dutch and foreign LPs that were tax transparent prior to 1 January 2025 and want to continue that classification. The grandfathering rules, shortly put, allow these LPs to remain tax transparent during 2025, 2026 and (possibly) 2027 as long as broader legislative amendments are pending to mitigate that certain "investment fund LPs" qualify as tax opaque.

Carried Interest and Sweet Equity – To increase the Box 2 personal income tax rates for indirectly held lucrative interests (e.g., certain carried interest and sweet equity stakes) to 28.45% for income up to € 68.843 and 36% for any income in excess of that amount.

Savings and Investments – To broaden the Box 3 taxable base for personal income tax purposes by increasing the deemed income from “other assets” (i.e., assets other than cash) from 5.88% to 7.78% and by reducing the tax-free base from € 57.684 to € 51.396. Taxpayers with lower actual returns from their savings and investments can still provide counter-evidence and request for a correction to lower their Box 3 personal income tax due.

Other notable tax measures that will become effective per 1 January 2026, but that were already formally adopted, are the following:

Residential Investment Property – The RETT rate for investment property that is ‘in nature fit for residential purposes’ at the time of acquisition will be reduced from 10.4% to 8%.

Property Related Services – A VAT revision period of five years will be introduced for certain property related investment services (e.g., renovation, repair and maintenance) with an invoice amount of € 30,000 or more.

Short-Stay Accommodation – The VAT rate for short-stay accommodation (e.g., hotels and holiday parks) will be increased from 9% to 21%.

Abuse of law and Interest Deductibility

The Dutch Supreme Court ruled that loans falling within the scope of Article 10a of the Dutch CIT Act (i.e., the general anti-base erosion rule) and that qualify for the double business motive escape, may nonetheless be deemed to constitute abuse of law (“fraus legis”). Although interest on such a related party loan is not caught by the interest deduction limitation known as the general anti-base erosion rule, it may still be non-deductible for CIT purposes under the abuse of law doctrine when its primary purpose is to obtain CIT benefits through interest deductions and it lacks a genuine purpose. A genuine purpose seemingly requires that the loan originates from a group company with a true financial hub function (i.e., actively managing financing within the group, with corresponding substance, and not a mere conduit company).

Supervision by the Dutch Tax Authority

The Dutch Tax Authority published an update of its “Enforcement Guideline for Large Enterprises”, outlining the design of their supervision and enforcement model. It also provides practical insights and expectations for implementing horizontal monitoring, strategic tax governance and tax control frameworks.

Consultation of 2027 Tax Measures

The Dutch Ministry of Finance launched a public consultation covering tax measures that are intended to become effective per 1 January 2027, including most notably:

Acting Together Concept – A clarification on how the Dutch acting together concept – also known as the cooperating group concept – should be applied when testing whether there is a membership right of at least 5% in a Dutch cooperative. A membership right of, shortly put, at least 5% is a qualifying membership right meaning profit distributions on such right are in principle subject to 15% Dutch dividend WHT.

Dividend WHT Refund Scheme – The introduction of a Dutch dividend WHT refund scheme for individuals and entities resident in the Netherlands that are indirectly entitled to dividends that were subject to Dutch dividend WHT. This scheme targets situations where these dividends are received indirectly through a foreign investment institution. This proposal aims to eliminate discrimination under EU law, as investing via a foreign investment institution triggers additional WHT leakage, whereas investing via a so-called Dutch fiscal investment institution (FBI) would not. This discrimination was confirmed to exist in relatively recent case law from the Dutch Supreme Court and is also the basis for an infringement procedure of the European Commission against the Netherlands. The current proposal still contains design flaws which do not make it “EU-proof” meaning further amendments are expected.

EU Tax Developments

Clean Energy Tax Incentives

The European Commission recommends EU Member States to incentivize clean energy investments (e.g., solar and wind technology, battery storage, heat pumps and so on) through, for example, accelerated depreciation or full and immediate expensing. EU Member States are invited to inform the European Commission by 31 December 2025 on domestic measures (to be) taken to implement these recommendations.

Validity Pillar 2 Undertaxed Profits Rule

The Belgian Constitutional Court has requested the CJEU to rule on the validity of the undertaxed profits rule (UTPR) included in the Pillar 2 Directive. More specifically, whether the UTPR provisions are compatible with various European rights and legal principles (e.g., the right to property, the freedom of establishment, the principle of legal certainty, and the principle of fiscal territoriality), insofar as those UTPR provisions make (Belgian) entities liable for paying top-up tax on undertaxed profits of group entities established in another jurisdiction with no connection to their own activities, and without taking into account the (Belgian) entities’ financial capacity.

Infringement Dutch Tax Levy Reduction Scheme

The European Commission sent a reasoned opinion to the Netherlands, as part of an infringement procedure, for failing to bring its tax levy reduction scheme in line with the free movement of capital. Unlike a Dutch fiscal investment institution (FBI), foreign investment funds cannot offset the (Dutch) WHT they incur on dividends received from their shareholdings against the WHT due when redistributing those received dividends to their investors. Therefore, the Dutch tax levy reduction scheme makes it less attractive for foreign investment funds to provide their services to Dutch investors and to invest in shares of Dutch companies. The Dutch Government has two months to respond before the European Commission may escalate proceedings to the CJEU.

VAT Treatment of Intercompany Management Services

The CJEU ruled that management services are not necessarily a single supply when they consist of multiple (service) elements. Therefore, the VAT treatment of such intercompany payments must be assessed per individual element. Furthermore, the CJEU clarified how to determine the at arm’s length price for VAT purposes in countries applying the open market value rule on intercompany transactions (e.g., Luxembourg). The decision highlights the need for clear documentation and valuation to support the envisaged VAT treatment.

Dutch Tax Developments

Lucrative Interest Regime

The Dutch State Secretary of Finance issued a letter outlining that abolition of Box 2 taxation for income from lucrative interests is undesirable and that the introduction of a higher Box 2 tax rate for income from lucrative interests is considered unnecessary based on feedback obtained through a public consultation earlier this year. Regardless, Parliament subsequently adopted a motion to introduce a higher Box 2 tax rate with effect from 1 January 2026.

Dividend Withholding Tax and Foreign CIVs

The Dutch domestic dividend WHT exemption does not apply when the foreign recipient of a dividend fulfils a similar function to that of a Dutch fiscal investment institution (FBI) or exempt investment institution (VBI). The Dutch tax authorities published their position that ‘similar function’ effectively covers all foreign collective investment vehicles (CIVs) subject to a specific tax regime that ensures the CIV is tax neutral (i.e., does not lead to an additional layer of taxation compared to a direct and individual investment).

Dividend Withholding Tax and Foreign Holding Companies

The Dutch domestic dividend WHT exemption is subject to an anti-abuse provision, which should be interpreted in accordance with CJEU case law. In recent cases, the Dutch Supreme Court ruled that a foreign shareholder should not be considered abusive when it conducts a material business (i.e., trading activity) and the shares in the distributing Dutch entity can be functionally attributed to this material business (or alternatively and shortly put, attributed to the material business of an indirect shareholder that would otherwise have been eligible for the WHT exemption). As this was not the case, the foreign shareholder had to evidence that it was not abusive.

The Supreme Court ruled against the foreign shareholder. Critical considerations to argue abuse were that the shareholders behind the foreign holding company retained full discretion to on-distribute the dividends received from the Dutch entity or to have this holding company reinvest. The holding company was not able to decide on this freely. The Supreme Court also considered it relevant that there was no reinvestment obligation for the foreign holding company. Other relevant considerations appear to be a lack of own payroll and office costs at the level of the holding company. More generally, the Supreme Court emphasized that certain elements of a structure can be abusive even if the structure was once set up for sound business reasons.

VAT Exemption on Outsourced Payment Processing Services

The Dutch Court of Appeal ruled that outsourced payment processing operations fall within the scope of the VAT exemption for payment services. This is a landmark decision, as outsourcing these operations is typically considered subject to VAT (also in other Dutch court proceedings to date). It is expected that the Dutch tax authorities will appeal this decision and that the Supreme Court will have the final say on the matter.

EU Tax Developments

ATAD3

The EU has abandoned ATAD3. The European Commission is expectedly considering to include additional hallmarks in DAC6 to capture entities that do not meet certain minimum economic substance requirements. This would turn ATAD3 into a reporting requirement without immediate tax consequences.

Refinement of the Danish cases

In the Neo Group UAB case, the CJEU has been requested to clarify the anti-abuse concept introduced in the “Danish conduit cases” for the EU Parent-Subsidiary Directive. In this case, the recipient of the dividend itself is a company with a genuine business activity instead of a “formal arrangement without economic reality”, the dividends were also not passed on “very soon after their receipt” and the distributing company may have had no knowledge of the non-genuine transactions to avoid dividend WHT higher up in the structure. This is one to monitor.

VAT Exemption for Servicing Loans

In various EU countries, it is market practice that the VAT exemption on the management of credit applies in securisation structures. In the A Oy case, the General Court of the EU has been requested to rule whether, and on what basis, the VAT exemption still applies after a transfer of the loans by the originator. This case is highly relevant for countries where the VAT exemption only applies when the servicing of the loans is carried out by the originator.

BEFIT Package

The introduction of the EU BEFIT Directive and TP Directive is still in limbo, with lingering support according to the latest ECOFIN Report on Tax Issues.

Focus of the FISC Subcommittee

The European Parliament’s FISC Subcommittee held further hearings on the simplification of the EU tax framework and how tax fragmentation among EU Member States impacts European competitiveness. No simplification suggestions or measures have yet been published.

Dutch Tax Developments

Funds for Joint Account

The Dutch Ministry of Finance issued a letter highlighting certain bottlenecks related to the tax opaque classification of Dutch and foreign LPs that qualify as a fund for joint account (FGR), despite the main rule that LPs should be transparent for Dutch tax purposes. A potential solution being considered is to amend the definition of FGR by (optionally or mandatorily) qualifying these LPs as transparent. Any amendments would likely become effective as of 1 January 2027.

Earnings Stripping Rule

The Dutch Ministry of Finance issued a letter announcing further assessment of three legislative routes to tackle abuse of the earnings stripping rule when activities are “fragmented” across various taxpayers to benefit from the € 1 million de minimis amount multiple times. These routes include limiting use of the de minimis amount to once per “group” instead of per taxpayer, introducing a lower de minimis amount for related party debt, or introducing a specific interest deduction limitation when equity is converted into related party debt.

Pillar 2 and Non-Resident Property Companies

The Dutch Tax Authority published its position that passively leased out real estate held by a non-resident property company should not qualify as a permanent establishment for the purposes of Pillar 2. As a result, the real estate income and profit taxes actually due in the property jurisdiction would be attributed to the non-resident property company and its jurisdiction of establishment. A counterintuitive outcome, which would likely also arise under BEFIT in its current form.

Tax Simplification Options

The Dutch Ministry of Finance published a report with options to lower tax rates and improve Dutch tax policy. The options include, amongst many others, abolishing the 19% CIT rate, lowering the 25.8% CIT rate to 24% and blending the VAT rates. These options are for the next cabinet to assess.

RETT Demerger Exemption

Under the RETT demerger exemption, a demerger of real estate is in principle exempt from RETT provided the demerger is not primarily aimed at the avoidance or deferral of tax. As of 1 July 2025, more restrictive requirements apply.

VAT Policy for Holding Activities

In 2024, the Dutch State Secretary of Finance issued two new policy decrees in relation to VAT grouping, and the acquisition, holding and sale of shares. Both decrees entered into force on 1 July 2025.

EU Tax Developments

DAC9 / Pillar 2

DAC9 entered into force and must be implemented by EU Member States into their domestic tax law by 31 December 2025. DAC9 facilitates central filing for Pillar 2 in the EU, opposed to filings per jurisdiction.

Focus of the FISC Subcommittee

The European Parliament’s FISC Subcommittee held hearings on the effectiveness and simplification of existing EU anti-tax avoidance measures, the status of Pillars 1 and 2 and their impact on investment flows and relations with the US, the use of tax incentives to stimulate investments, and the impact of tax policies in light of the housing crisis across the EU.

Franklin Mutual v. Austria

In Austria, investment funds are tax transparent and therefore not eligible for a domestic WHT exemption. Under Austrian law, investment funds do not have legal personality, whereas the US-based Franklin Mutual European Fund (FMEF) does. The CJEU ruled that Austria’s classification of FMEF as tax transparent does not constitute a restriction on the free movement of capital as FMEF is still objectively comparable to an Austrian investment fund - provided that the income received by the FMEF is attributed to, and taxed at, the level of its unitholders. This CJEU ruling echoes earlier decisions by focusing on the purpose of the investment fund concept under Austrian tax law (namely, to safeguard tax neutrality) rather than applying a strict comparison between FMEF’s US characteristics and those of Austrian investment funds.

Dutch Tax Developments

Box 3 Regime

A legislative proposal for a new personal income tax regime for income from savings and investments (Box 3) has been submitted for Parliamentary approval. Instead of the current taxation based on deemed returns, the Netherlands will levy personal income tax at 36% over actual returns (e.g., interest and dividend income, and capital gains). Notably, unrealised capital gains will also be taxable with certain exceptions such as for real estate. If adopted, the new Box 3 regime would become effective on 1 January 2028.

Lucrative Interest Regime

Now that the public consultation on alternative personal income taxation methods for income from lucrative interests has closed, the Dutch State Secretary of Finance reiterated that Parliament will be informed as soon as possible about possible next steps.

EU Tax Developments

Nordcurrent Group v. Latvia

The CJEU ruled that a domestic participation exemption may be denied under the general anti-abuse rule of the EU Parent-Subsidiary Directive in the case of a “non-genuine arrangement” with a “tax advantage.” Both elements must be assessed considering “all facts and circumstances.”

Green Transition and Simplification

The European Parliament’s FISC Subcommittee held a public hearing on the role of tax in the green transition, and a discussion on a range of policy considerations aimed at simplifying the EU tax framework, with a particular focus on cutting compliance and reporting requirements.

Dutch Tax Developments

Foreign Substantial Interest Regime

The Dutch Supreme Court ruled that foreign shareholders without trading activities or a head office function, and that do not meet the minimum substance requirements (having “limited substance”), do not per definition constitute abuse. Commercial justification and economic reality (in line with EU case law) are the more important elements.

FBIs and LPs

Fiscal investment institutions (FBIs) are only allowed to conduct passive investment activities. The Dutch Tax Authority confirmed their position that trading activities of a tax transparent LP should not be attributed to an FBI as limited partner for the purposes of the passive investment test.

Conduit Companies

An appendix to the Dutch Spring Budget Statement shows that the introduction of an “open norm” for “conduit companies” is still being considered. This open norm is expected to formally abolish the static minimum equity at risk rule of € 2 million or 1% of the outstanding loan volume.

Earnings Stripping Rule

The Dutch Ministry of Finance will inform Parliament by 1 July on its review of anti-abuse measures applied by other EU Member States in relation to the earnings stripping rule. This review follows the decision to cancel the planned abolition of the € 1 million de minimis amount for “real estate entities.”

Tax Treaties

The newly signed tax treaties with Belgium and Germany are on a list of treaties to be submitted for Parliamentary approval in 2025. The new tax treaty with Spain, which is expected to include a real estate rich clause, is not mentioned.

Lucrative Interest Regime

The Dutch Ministry of Finance closed the public consultation on alternative personal income taxation methods for income from carried interests and management incentive plans. The general feedback is to maintain the possibility of Box 2 taxation.

Hedge Accounting

The Dutch Supreme Court clarified that mandatory hedge accounting for CIT purposes not only requires a highly effective hedge (i.e., a correlation of 80%-125% for the relevant balance sheet items), but also a hedging intention.