• Service: Tax, Global Transfer Pricing Services, International Tax
  • Type: Regulatory update
  • Date: 3/19/2014

Netherlands - Dutch taxpayer liable for Swiss captive subsidiary’s profits 

March 19:  A January 2014 decision of the Dutch district court of Zeeland/West-Brabant concerned a Swiss captive-insurance company (without employees), taxing most of its profits back in the hands of a related Dutch taxpayer and with 50% penalties being imposed. No appeal was filed, and the decision is now final.

In the opinion of the district court, the tax inspector adequately demonstrated that the conditions agreed upon were not at arm’s length.

The taxable amounts attributable to the taxpayer were reduced by the court by a 7.5% return on the actual equity of the captive over the years 2005 through 2008.

Also, the court imposed penalties amounting to 50% of the additional Dutch corporate income tax, on a finding that the Dutch taxpayer intended to evade taxation in the Netherlands on a substantial part of its profit by setting up the structure with the captive subsidiary and by paying an excessive amount of premiums to the captive.

Read a March 2014 report [PDF 263 KB] prepared by the KPMG member firm in the Netherlands.

Contact a tax professional with KPMG's Global Transfer Pricing Services.

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