Dutch Bank Tax Clarified

by Jeremy Hetherington-Gore, Tax-News.com, Brussels

28 December 2011

The Netherlands has firmed up its proposals for a tax on bank assets, likely to be implemented in mid-2012. The tax was announced last July, but the final proposals are different in various respects from those announced in July, notably in regard to the rates to be applied.

The newly-announced rates are 2.2% on 'uncovered' risk for short term assets (up to one year) and 1.1% for longer term assets. But there will be a 5% surcharge if any board member of the bank has a bonus which exceeds his or her fixed remuneration, taking the rates to 2.31% and 1.155%.

The tax will be levied on an annual basis, being payable ten months after compilation of the bank's balance sheet.

'Uncovered' means assets in excess of regulatory capital, although some other adjustments may be possible. The rules governing applicability of the tax in structural terms are complex: in essence they are both territorial, ie applying to banking activities conducted in and from the Netherlands, and seek to limit applicability of the tax to banking activities if they form only a minor part of the business of a group. Thus with correct structuring it will probably be possible for the Dutch or foreign owners of Netherlands banking operations to exclude non-banking and non-Netherlands assets from the scope of the tax.

Proceeds from the tax are expected to be applied to strengthening of the banking sector, rather than being taken into the general public purse; but the mechanism for this is not entirely clear.

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