List of low-tax jurisdictions for 2024 published
22/02/24
The “Regulation on low-tax states and non-cooperative jurisdictions for tax purposes” contains the Dutch list of designated low-tax jurisdictions for the application of the Dutch Controlled Foreign Corporations (CFC) legislation, and with regard to the conditional withholding tax on interest and royalty payments and, as of 1 January 2024, dividend payments.
What does this mean for your organisation?
The list of low-tax jurisdictions is important in the following two cases.
When your Dutch company pays interest, royalties or dividends to an affiliated entity in a designated low-tax jurisdiction, your company may be subject to a conditional withholding tax on these payments. Low-tax jurisdictions in this case are jurisdictions with a profit tax at a statutory rate of 9 percent or less, and countries on the EU list of non-cooperative jurisdictions. The rate of the conditional withholding tax is equal to the highest corporate tax rate. Currently that is 25.8%.
If your company participates in a 'Controlled Foreign Company' (hereinafter: CFC) in a designated low-tax jurisdiction, the CFC measure in corporate tax ensures that 'benefits from a controlled entity' are taken into account when the Dutch company that participates in the CFC. As a result of the CFC measure, your company may effectively be taxed for certain passive benefits achieved through a CFC.
Designated low-tax jurisdictions: importance of the list
The conditional withholding tax on interest, royalty and (as of 1 January 2024) dividend payments only applies to payments to affiliated entities in low-tax jurisdictions. In addition, the CFC measure in corporate tax only applies to certain passive benefits achieved by a CFC in a low-tax jurisdiction. What should be understood by a low-tax jurisdiction in this case?
The Dutch list of low-tax jurisdictions contains countries with a profit tax with a statutory rate of less than 9 percent. The Dutch list is revised every year according to the state of affairs as of 1 October, and applies in the following year. In addition, the Dutch list contains the countries that are included in the October version of the EU list of non-cooperative jurisdictions. The most recent EU list for a given year therefore applies in the following year.
The countries on the Dutch list of low-tax jurisdictions and the EU list of non-cooperative jurisdictions are jointly designated as low-tax jurisdictions for the application of the conditional withholding tax on interest, royalty and dividend payments, and for the application of the CFC measure in corporate tax.
Designated low-tax jurisdictions: list valid for 2024
As mentioned, the Dutch list of low-tax jurisdictions was revised at the end of December 2023. It reflects the state of affairs as of 1 October 2023, and applies to the year 2024. It is important that the United Arab Emirates is deleted from this list, effective from 1 January 2024.
Earlier, on 17 October 2023, the Council of the EU published the EU list of non-cooperative tax jurisdictions. It is important that Antigua and Barbuda, Belize, the Russian Federation, and the Seychelles have been added to this list with effect from that date. The February 2024 list – published on 20 February 2024 – is therefore not relevant for 2024 purposes in the Netherlands.
Tot the right is an overview of the countries that are classified as low-tax jurisdictions for the year 2024.
For completeness’ sake, it is noted that the three-year period for treaty countries mentioned in Article 1.2, paragraph 2 of the Withholding Tax Act 2021 will expire for Bahrain, Barbados and Panama with effect from 1 January 2024. This means that from that date withholding tax may be due if – in short – interest, royalty or dividend payments are made to beneficiaries established in these states. This of course only applies to the extent that the Netherlands has a right to tax under the applicable double taxation treaty.
| NL list of states without a profit tax or with a profit tax at a rate of less than 9% | EU-list of non-cooperative jurisdictions |
Anguilla Bahamas Bahrein Barbados Bermuda British Virgin Islands Cayman Islands Guernsey Isle of Man Jersey Turkmenistan Turks- and Caicos Islands Vanuatu |
American Samoa Anguilla Antigua and Barbuda Bahamas Belize Fiji Guam Palau Panama Russian Federation Samoa Seychelles Trinidad and Tobago Turks- and Caicos Islands U.S. Virgin Islands Vanuatu |
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