Transitional tax legislation for “no-deal Brexit” scenario

The State Secretary for Finance, Menno Snel, in a letter to the Lower House of the Dutch Parliament – in presentation of the EY-prepared impact analysis cum validation report – has announced his intention to introduce a set of transitional tax rules in the event of a no-deal Brexit, as a topic which he has confirmed he will come back to in the very near future.

The validation report provides for an assessment of how pertinent the Tax and Customs Administration’s procedures and preparations for a “hard Brexit” are. The tax authorities fully appreciate what they have to do in order by 29 March next to be ready for a “no-deal Brexit”. The implementation of the various measures has been given top priority.

The impact analysis is all about the corollary of a “no-deal Brexit”. The Tax and Customs Administration is quite clear on what the major changes will be. Those who as UK residents are recipients of pension benefits or sundry income from the Netherlands, who are Dutch-resident British nationals or who as British residents work in the Netherlands, to a total of some ten thousand individuals, will be affected by a “hard” Brexit in ways which the impact analysis addresses in more detail.

The impact analysis also discusses the now defunct EU Directives. The Tax and Customs Administration expects an increase in the number of requests from the business community for preliminary consultations. In future these will be characterised by a stronger focus on rationalisation of the business structure, not least where it concerns the issue of the business’ domicile.

Dutch version: Overgangsrecht no-deal Brexit