October 20, 2017

A long-expected Dutch government coalition has been recently formed, presenting their policy agenda for the coming years in the coalition agreement on October 10, 2017.

Among the measures introduced by the new government attention is driven to the reduction of the corporate tax rate. The latter will be reduced from 25% to 21% in 2021 for large corporates. The reduction is intended to be implemented in steps of 1%, 1.5% and 1.5% in 2019, 2020 and 2021, respectively.

One more measure to be introduced is the reduction of tax deductibility of interest payments. The amount of net interest paid that exceeds the threshold of 30% of EBITDA would be no longer tax deductible. This measure, thought of a negative character, should influence only highly leveraged corporates.

In order to protect Dutch listed corporates from hostile takeovers from “activist shareholders” a 250-day reflection period for takeovers will be introduced. This measure clearly seems to be a reaction on the recent cases of Unilever and Akzo Nobel. The step to be taken is a positive one, as hostile takeovers often result in a higher leverage profile. However, the measure would only stretch the timeline, not prevent hostile takeovers as a matter of fact.