Repeal of decision to prevent double tax on (supervisory) directors’ remuneration
The tax position of (supervisory) directors of companies established abroad will change. This has major consequences.
The (supervisory) directors as residents of the Netherlands are subject to tax in the Netherlands on their worldwide income, but also subject to taxation for the remuneration paid out in the country in which the paying company is resident. The Netherlands will provide an allowance for avoidance of double taxation by means of an income exemption. The Dutch tax treaty policy aims to use the so-called credit to tax provision to (supervisory) directors’ remunerations. This is less advantageous as only foreign taxes can be credited with Dutch tax.
The decision of 18 July 2008, however, approved the use of the exemption method (conditionally). The exemption method is often more advantageous, especially if a lower rate can be applied elsewhere. Unfortunately, the decision will be repealed and the Netherlands will actually charge an additional tax, resulting in a serious tax burden.
Would you like more information about repealing this decision? Please contact Vincent Wanningen, senior tax advisor at ABAB International, on telephone number +31(0)13-4647209 or send Vincent an e-mail.