FATCA in Netherlands

In order to tackle tax evasion and undeclared savings, the Dutch Tax and Customs Administration (Belastingdienst) decided to exchange information automatically with more and more countries. This information is obtained from financial institutions.

EXCHANGING INFORMATION WITH THE UNITED STATES

The Dutch tax authorities started supplying the required information to the United States tax authorities, known as the IRS, at the end of September 2015. This was inclusive of the information from 2014, but not from previous years. Conversely, the IRS agreed to supply information to the Dutch tax authorities.

Financial information would be exchanged and this shall be based on the Foreign Account Tax Compliance Act (FATCA) and the FATCA agreement between the Netherlands and the United States. The exchange of information would not begin until both the houses of the Dutch parliament have given their approval. A bill was, thereafter, submitted to that end.

FATCA MEANS A SIMPLER PROCESS AND BETTER LEGAL PROTECTION

The FATCA agreement makes it easier for Dutch financial institutions to share information. They no longer have to conclude their agreements with the IRS separately. Moreover, in principle, they no longer face the risk of paying a 30% withholding tax on the US income sources.

The agreement has also provided better legal protection for the clients of these financial institutions. This is because the institutions no longer would be required to supply information directly to the IRS. Also, this would then be arranged through the Dutch Tax and Customs Administration. Both, the Dutch and US tax authorities have maintained high standards of data protection.