On October 25 the Russian government approved amendments to the tax legislation concerning de-offshorization of Russian business.

The main purpose is to introduce a new chapter to the Tax Code of Russian Federation related to the controlled foreign company (CFC) and the controlling entity. The rules aim at taxation of undistributed earnings of foreign companies or structures at the level of their controlling persons in the Russian Federation.

Signed in May 2013 new tax treaty between China and the Netherlands was ratified by the governments of both countries and entered into force on 31 August 2014. The treaty is applicable to income received on or after 1 January 2015 for both countries. The most significant highlights are as follows:

On 16 September 2014 the Dutch Minister of Finance released the Dutch Government’s response to the reports in the OECD BEPS project.

Substance requirements become more stringent and sophisticated. More often tax authorities require presence of operating office with actual staff and all other attributes of business activity.

New bilateral rules for the avoidance of double taxation between the Netherlands—including Dutch jurisdictions located in the Caribbean—and Curaçao were announced and presented on 10 June 2014 to the Dutch parliament for approval. It is expected that the new amendments will come in force on 1 January 2015.

On 13 June 2014 five new updated Decrees concerning advance pricing agreements (“APA”), advance tax rulings (“ATR”) and substance requirements came into effect.

On 18 March the MinFin of Russian Federation published a draft of the legislative amendments concerning taxation of income of foreign companies. The purpose of these amendments is to obligate Russian legal entities and individuals to pay taxes in Russia from income of their foreign subsidiaries and controlled legal entities.

Increase of interest rates

Effective 1 January 2014, the Dutch Government introduced a new interest rate for late payment of corporate income tax (CIT) of at least 8% (for 2014: 8,25%) and for all other taxes - at least 4%. Interest on CIT late payment is imposed for the period starting 1 July the year following the reporting tax period until the date of payment.

The Hague district court issued a judgment concerning value added tax (VAT) on the re-charged fees related to a bank’s use of an external advisor in connection with providing loans to a partnership (one of the bank’s customers).

In the court’s opinion, the re-charging of these fees qualified as a VAT-exempt extension of credit, and thus, no VAT is payable.

On 12 June, 2014 the Court of Justice of the European Union (CJEU) in connection to a Dutch case concluded that Dutch law is not compliant with EU law—i.e., the freedom of establishment—in denying tax consolidation (fiscal unity):
• between a Dutch parent company and its Dutch sub-subsidiary (when the subsidiary is not a resident of the Netherlands); or
• between two Dutch “sister subsidiaries” (when the parent company is not a resident of the Netherlands).
Under Dutch law, a fiscal unity for corporate income purposes cannot be established between sister companies of a foreign parent, or between sister companies and the foreign parent.
It is expected that the Dutch legislator will amend the fiscal unity legislation to bring it in line with the decision of the CJ.