UK/Netherlands Double tax convention
A new Double Taxation Convention between the UK and the Netherlands has been ratified in the UK and the Statutory instruments have been entered into law.
The convention will take effect in the UK from 1 April 2010 in relation to corporation tax and from 6 April 2010 in relation to income tax and capital gains tax assuming that the Netherlands as expected complete their legislative process this year. The provisions will apply from 1 January 2010 (again assuming the Dutch complete their legislative changes).
The agreement seeks to avoid double taxation in relation to income tax, corporation tax and capital gains tax in the UK and similar taxes in the Netherlands including income tax and wages tax.
The Convention also includes some additional rules in respect of petroleum revenue tax and ring fence trades which have been included to allow the Netherlands to give relief for these specific taxes.
HMRC have published an explanatory memorandum to be read in conjunction with the Statutory Instrument. The new agreement is designed to replace earlier agreements between the two countries and follows the approach set out in the OECD’sModel Tax Convention on Income and on Capital.