Netherlands: Interest deduction limitation, exit tax | KPMG Global
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Netherlands: Proposals for interest deduction limitation, exit tax, CFC rules

Netherlands: Interest deduction limitation, exit tax

A document released 10 July 2017 for public consultation concerns the proposed introduction of anti-tax avoidance measures into Dutch tax law—specifically proposals concerning:


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  • Interest deduction limitation
  • Exit tax
  • Controlled foreign company (CFC) measures that would affect a taxpayer’s controlled entities and permanent establishments


The proposed measures reflect provisions under the European Anti-Tax Avoidance Directive (ATAD1). Specifically, the ATAD1 prescribes that the Netherlands implement five measures by 2019 to address taxpayer attempts to avoid corporate income tax. The five measures concern: 

  • A limit on the deductibility of interest by way of earnings stripping rules 
  • Exit tax rules
  • A general anti-abuse rule (GAAR)
  • Rules for foreign companies and permanent establishments (controlled foreign companies or CFCs)
  • A measure against hybrid mismatches (hybrid entities and hybrid financing)

The proposals as set for consultation in the Netherlands only address the first, second, and fourth measures. There has not been a proposal for additional legislation under the third measure because the Dutch Cabinet believes this measure has already been implemented through the abuse of law principle (fraus legis). 

The fifth measure does not have to be implemented until the end of 2019 (unlike the first four that, in principle, must be implemented by the end of 2018) and will therefore be deferred until a subsequent consultation.

Topics for consultation

The measures set for consultation concern the following topics:

  • Interest deduction limitation 
  • Exit tax
  • Controlled foreign company (CFC) measures that would affect a taxpayer’s controlled entities and permanent establishments


Read a July 2017 report prepared by the KPMG member firm in the Netherlands that describes in detail these measures

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