The BIK scheme in relation to cross-border investment

The Job Related Investment Discount (Dutch abbreviation: BIK) scheme comes under the category of emergency measures. Its aim is to boost domestic investment. One of the elements of the scheme specifically relates to corporation tax units and leaves room for a single withholding agent that forms part of such a tax unit to qualify for BIK withholding agent designation, thus ensuring that investments made by participants in the tax unit that do no themselves have withholding agent status should nevertheless qualify for the BIK scheme. One of the criteria of a tax unit is that its participants should be Dutch-based. Given the risk of the courts dismissing this particular element of the BIK scheme as being incompatible with the freedom of establishment doctrine, which in turn could prevent part of the BIK budget benefiting domestic investments, the Junior Finance Minister has officially notified the European Commission of the BIK scheme in order to have it granted “lawful support” status.

The Junior Finance Minister is shortly to present the Lower House of the Dutch Parliament with an amendment to the pending 2021 Tax Plan Bill, to the effect that the element of the BIK scheme that pertains to tax units is not to take effect without the European Parliament first having granted permission. If no permission is received, the BIK percentages are to be retroactively increased from the first of January 2021 onwards.

Dutch version: De BIK in relatie tot investeringen in het buitenland