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Strategic Considerations for International Investors in Dutch Real Estate

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Strategic Considerations for International Investors in Dutch Real Estate

From an economic viewpoint, the Netherlands is a highly attractive destination for international real estate investors, thanks to its robust legal framework, transparent property market, and strategic location within Europe. From a tax policy viewpoint, however, the Dutch tax environment can be challenging, as it is subject to frequent legislative changes. Recent updates – including the partial discontinuation of the Dutch equivalent of a R.E.I.T., known as the F.B.I. regime, revised entity classification standards, and stricter interest deduction rules – have significantly impacted the landscape for cross-border investors. In his article, Anton Louwinger, a partner in CMS Netherlands, Amsterdam, explains the important issues at various points in the ownership period, including (1) R.E.T.T. or V.A.T. on purchases, (2) C.I.T. during ownership, (3) caps on deductions for interest expense and application of anti-abuse rules for payments to a foreign related party, (4) withholding tax on interest and dividend payments, (5) caps on the use of N.O.L.’s, and (6) taxation of capital gains upon sales.

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Dramatic Changes Proposed in the Definition of the Tax Term "Israeli Resident"

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Dramatic Changes Proposed in the Definition of the Tax Term "Israeli Resident"

Under current Israeli tax law, an individual’s tax residency status is determined primarily by the “Center of Life” test, which examines personal, economic, and social ties to Israel and another country. The test is supplemented by numerical presumptions that look to the number of days an individual is present in Israel over a period of time looking to one year or three years. A determination based on day count can be challenged by either the taxpayer or the Tax Authority. In 2023, a draft bill was published that provided an irrebuttable determination of tax residence or nonresidence in certain fact patterns. The draft bill was never enacted. In July, the Israeli Ministry of Finance announced draft legislation designed to modify existing rules. In his article, Boaz Feinberg, a Tax Partner of Arnon, Tadmor-Levy, Tel Aviv, explains the proposal in detail, including the new five-year rolling testing period and the weight given to days in each year of the testing period. He points out that days of presence in later years can affect the residence status in earlier years.

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Still Fourth Down and Goal for Medtronic Transfer Pricing Case

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Still Fourth Down and Goal for Medtronic Transfer Pricing Case

In an article published in Insights in 2022, Michael Peggs commented that the Tax Court knew where it wanted to end up and simply looked for a method that was consistent with its destination. He predicted that the approach of the Tax Court was not likely to be upheld on appeal. In early September, the Tax Court’s decision was vacated and remanded for further proceedings. In the “boxing matches” taking place between (1) Medtronic and the I.R.S. and (2) the Tax Court and the Court of Appeals, it seems the boxers are in the fourth round of a ten-round bout. Stay tuned.

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Bigger Benefits for (Bigger) Small Businesses: Q.S.B.S. Changes in O.B.B.B.

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Bigger Benefits for (Bigger) Small Businesses: Q.S.B.S. Changes in O.B.B.B.

The Qualified Small Business Stock” (“Q.S.B.S.”) rules broadly allow for tax-free sales of Q.S.B.S., up to a certain limit. The benefit is subject to meeting several requirements, among which is a requirement for a five-year holding period by the seller. In their article, Galia Antebi, Nina Krauthamer and Wooyoung Lee explain that the One Big Beautiful Bill (“O.B.B.B.”) causes the Q.S.B.S. benefit to be significantly more investor friendly. It allows for more gain exclusion, bigger businesses to qualify, and partial exclusions for holding periods shorter than five years.

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F.I.R.P.T.A. Revisited -- Things To Remember When Nonresidents Invest in U.S. Real Property

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F.I.R.P.T.A. Revisited -- Things To Remember When Nonresidents Invest in U.S. Real Property

The year 2025 marks the 45th anniversary of the enactment of the Foreign Investors Real Property Tax Act. It is a good time to revisit issues that are faced by nonresident investors considering an acquisition of real property in the U.S. For the private investor, many decision points must be addressed. Here are a few that come readily to mind: (1) Will the investment generate passive or active income? (2) Now and possibly in the future, will the investment be limited to one property or will there be multiple properties? (3) Is it better to own the property directly or through a holding company? (4) Should the holding company be formed in the U.S. or abroad there, or should there be holding companies in both places? (5) Should the holding company be tax-transparent or tax-opaque? (6) Will the structure prevent death duties from being imposed in the U.S.? (7) If the initial holding structure produces suboptimal results, can the structure be revised, and if so, at what cost? (8) Is it better to hold all U.S. properties through one U.S. holding company or is it better to hold each U.S. property through its own separate U.S. holding company? Stanley C. Ruchelman and Wooyoung Lee provide guidance to foreign investors and their home country advisers so that well-reasoned investment structures can be formulated at the front end that take into account U.S. tax rules, foreign tax rules, and preferences of the particular client.

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Budget Resolution Tax Provisions Contain Reprisal Tax Aimed at O.E.C.D. Proposals

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Budget Resolution Tax Provisions Contain Reprisal Tax Aimed at O.E.C.D. Proposals

On Friday, May 22, 2025, the U.S. House of Representatives adopted a budget resolution containing provisions that would impose increased taxes for persons based in countries that impose taxes found to discriminate against U.S. companies or their subsidiaries. If a country is determined to have “crossed the line,” residents of that country and their subsidiaries would face up to a 20% increase in withholding taxes on U.S. source investment income, income taxes on income that is effectively connected to the conduct of a U.S. trade or business, and certain other taxes. In his article, Stanley C. Ruchelman lists the foreign persons that will be subject to the reprisal tax, the tax regimes that are expressly targeted, the implementation schedule, and the taxes that will be increased.

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The §245A D.R.D. Meets the I.R.S.: Only Loper Bright Might Provide Relief

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The §245A D.R.D. Meets the I.R.S.: Only Loper Bright Might Provide Relief

Alan Greenspan is an American economist who served as the 13th chairman of the U.S. Federal Reserve from 1987 to 2006. He is known to have authored the following quote: “I know you think you understand what you thought I said but I’m not sure you realize that what you heard is not what I meant.” This statement epitomizes the conflict between the I.R.S. and various taxpayers regarding the application of Code §245A to the computation of C.F.C. income for purposes of Subpart F. Code §245A allows a domestic corporation to reduce taxable income by means of a dividends received deduction (“D.R.D.”) for the foreign-source portion of a dividend received by a U.S. corporation from a ≥10%-owned foreign corporation. Treas. Reg. §1.952-2 requires that a C.F.C. must calculate its income for U.S. income tax purposes by using U.S. rules as though it were a domestic corporation. Finally, Code §245A(e)(2) expressly provides a rule for C.F.C.’s receiving hybrid dividends from a lower-tier subsidiary. The D.R.D. is expressly disallowed at the level of a C.F.C. receiving the hybrid dividend. Nonetheless, in C.C.A. 202436010, the I.R.S. enunciated its view that a C.F.C. could not claim a benefit from the D.R.D. Rather, the benefit is first claimed by a domestic corporation when it recognizes income. So, which position is correct? In his article, Wooyoung Lee discusses the law, the regulations, the C.C.A., and cases addressing the deference that should be given by courts to the views of an administrative agency when evaluating the interpretation of a statute.

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Double Dutch: A Unique Approach in the Netherlands to U.S. L.L.C.’s Owned by U.S. Trusts

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Double Dutch: A Unique Approach in the Netherlands to U.S. L.L.C.’s Owned by U.S. Trusts

Trusts play a crucial role in U.S. estate planning. However, the use of a U.S. trust in an international context can create a multitude of challenges. The Dutch tax system’s approach to the taxation of trusts poses a number of concerns for U.S. trust fund beneficiaries living in the Netherlands benefitting from a testamentary trust. In the not unusual set of circumstance where an L.L.C. is established to hold investments of the trust, double taxation without the benefit of foreign tax credits is more than a theoretical problem. In her article, Mignon de Wilde, a partner and tax adviser in the Amsterdam office of Arcagna Tax Consultants and Notaries, cautions that only two solutions seem to be available. Advance tax planning during the lifetime of the settlor is the preferred alternative. Seeking Competent Authority relief under the Netherlands-U.S. Income Tax Treaty is available in principle. Favorable authority exists in the Netherlands, less so in the U.S.

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Are Holding Companies so 20th Century? A Look at Recent Developments in France

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Are Holding Companies so 20th Century? A Look at Recent Developments in France

Historically, holding companies have been used by corporate groups to place certain assets in certain locations to serve certain markets. They have also been used by individuals for wealth management and estate planning purposes. Today, holding companies located in an E.U. Member State or elsewhere are likely to face challenges when interacting with group members in France. Claims of treaty benefits are regularly challenged by French tax authorities. Whether the benefit is a tax treaty related withholding tax exemption on dividends or royalties or access to E.U. Directives such as the Parent-Subsidiary Directive, French tax authorities regularly challenge claims of an entitlement to the anticipated tax benefit. In her article, Emilie Lecomte, a Partner in the Tax Department of SQUAIR Law Firm, Paris, explains the risks faced by a foreign holding company that expects to benefit from favorable tax regimes for French-source income. Recent cases are discussed

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Tax Neutral or Caught in the Net? The World of Luxembourg Securitization Vehicles

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Tax Neutral or Caught in the Net? The World of Luxembourg Securitization Vehicles

The Luxembourg securitization vehicle (“Lux S.V.”), governed by the Securitization Law of 22 March 2004 remains a core pillar in structured finance and asset repackaging across Europe. As Luxembourg continues to implement E.U. directives such as A.T.A.D. I & II, D.A.C.6., and the O.E.C.D.’s B.E.P.S. action plan – Including Pillar Two and substance-driven anti-abuse frameworks – Lux S.V.’s face growing scrutiny. In their article, James T. O’Neal, Co-head of Maples and Calder (Luxembourg)‘s Tax Team, and Naima Bouzago Ouali, an Associate in Maples and Calder (Luxembourg)’s Tax Team, analyze how A.T.A.D. I & II’s Hybrid Mismatch Rules and A.T.A.D. I’s Interest Limitation Rules can be successfully navigated in the appropriate set of facts, thereby preserving their tax neutrality. Hybrid mismatch rules, investor payment tax treatment, and interest limitation rules that include the single company worldwide group exception are addressed.

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Prenuptial Agreements in the Context of an International Couple – Views from France and Spain

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Prenuptial Agreements in the Context of an International Couple – Views from France and Spain

Choosing a life partner is a complex decision. It becomes even more complex if the parties are not of the same nationality or if one of the parties moves to another country in order to avoid a two-city lifestyle. Many couples in France and Spain are unaware that, in the absence of a duly executed prenuptial agreement, the rules that determine how property will be distributed if the marriage is dissolved due to divorce or death will be the rules of the first country of residence after their marriage becomes official. Conversely, other couples believe that they are protected by the provisions of a prenuptial agreement signed in France or in Spain that generally provides for separation of property. However, the contract may not be followed in common law countries such as England and United States, meaning that each spouse is entitled to one-half of the marital assets. All this and more are explained in the article authored by Delphine Eskenazi, a Partner of Libra Avocats, Paris, and Maria Valentin, of Counsel to Libra Avocats, Paris. The takeaway is that life can be about more than tax planning.

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New Belgian Federal Government Announces Significant New Tax Measures

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New Belgian Federal Government Announces Significant New Tax Measures

The most recent general election in Belgium took place in June, but a new government was not sworn in until February, when the five-member coalition government agreed to a federal government agreement, a document of 200 pages in a single language containing many significant tax measures. Tax items addressed include, inter alia, (i) the replacement of a dividends received deduction by a simple exclusion, (ii) the modernization of the group contribution regime, the Belgian equivalent of group relief, making it more flexible and simpler to coordinate, (iii) the simplification of the investment deduction rules, the Belgian equivalent of investment credits in the U.S., (iv) the adoption of accelerated depreciation rules for CAPEX investments, (v) the adoption of a “solidarity contribution,” a 10% capital gains tax on financial assets held by individuals, allowing a basis step-up to current value as of the effective date of the tax, (vi) simplification of disallowed expense rules, and (vii) the adoption of carried interest rules for managers of investment funds. Werner Heyvaert, a senior international tax lawyer based in Brussels and a partner at AKD Benelux Law Firm explains these and other tax provisions. The takeaway is that Belgium is modernizing its tax rules.

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French Budget 2025 – Significant Provisions Affecting Individuals

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French Budget 2025 – Significant Provisions Affecting Individuals

The French Budget for 2025 reflects significant political instability reflecting two factors. The first is the fragmentation of the French Parliament after elections last summer. The second is a significant budgetary deficit. It was adopted with limited debate on February 14, 2025, after an earlier Finance Bill was rejected in December 2024, resulting in a change of government. Key measures to note include, inter alia, (i) Introduction of enhanced social contribution on high incomes, with an instalment that was due in December 2025, (ii) reform of the tax and social security treatment of management packages, including those already in existence, (iii) an overhaul of the tax framework for the B.S.P.C.E., one of the main employee shareholding tools, (iv) tax incentives for gifts received to acquire a new primary residence or to finance energy-efficient renovations, (v) Introduction of a special reassessment period in cases of misreported tax residence, (vi) clarification on the supremacy of treaty law in determining tax residency, (vii) additional social contributions for companies with revenues over a €1 billion, and (vii) a tax on capital reductions linked to share buybacks by companies with revenues exceeding a €1 billion. Philippe Stebler, the founder of Stebler Avocats, Paris, explains these and other provisions. The takeaway is that, if you thought French taxes in 2024 could not get any higher, you were mistaken.

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N.H.R. 2.0 in Portugal – a Better Regime for Skilled Workers and Their Employers

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N.H.R. 2.0 in Portugal – a Better Regime for Skilled Workers and Their Employers

Following the unexpected termination of the N.H.R. regime to newly arrived residents as of December 31, 2023, a new regime was offered, known as N.H.R. 2.0. The new regime attracts working individuals, investors and international groups planning on setting up Portuguese subsidiaries. N.H.R. 2.0 is now fully operational for those within scope of eligible activities, which is very wide. João Luís Araújo, a Partner in the Porto Office of Telles, and Sara Brito Cardoso, an Associate in the Porto Office of Telles, explain why N.H.R. 2.0 provides a better result for newly arrived skilled personnel and their employers. The takeaway is that Portugal is very much open for business and keen to attract talent, companies, and investment.

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French Tax Investigations Target H.N.W. Individuals

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French Tax Investigations Target H.N.W. Individuals

Tax evasion and avoidance have been significant concerns for governments worldwide, and France is no exception. In recent years, the French government has ramped up efforts to investigate high net worth individuals (“H.N.W.I.’s”) suspected of tax evasion, particularly as global scrutiny increases over the wealthy’s financial practices. France, with its robust tax system and a tradition of enforcing tax compliance, utilizes a range of investigative techniques to target H.N.W.I.’s. The article delves into how French tax investigations are carried out, focusing on methods, legal framework, and high-profile cases involving the wealthy. Sophie Borenstein, a partner of attorneys Klein Wenner, Paris, explains all. The takeaway is that the footprint of an H.N.W.I. is large and is being looked at in detail by the tax authorities.

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When Baskets Go Beyond Weaving – Understanding Foreign Tax Credit Baskets Under the Look-Through Rules

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When Baskets Go Beyond Weaving – Understanding Foreign Tax Credit Baskets Under the Look-Through Rules

While the word “basket” may trigger a mental image of a bicycle with a daisy basket that is a gift in early childhood, the term has a totally different connotation in the tax world. It denotes “foreign tax credit baskets” to an international tax geek in the U.S. The foreign tax credit provisions are among the most complicated areas of U.S. and become further complicated when a “U.S. Shareholder” of a Controlled Foreign Corporation includes income in one year but receives distributions in another. In their article, Neha Rastogi and Stanley C. Ruchelman explore the labyrinth of the foreign tax credit provisions that are designed to ensure that (i) income and (ii) related foreign taxes are reported in the same foreign tax credit basket. The takeaway is that, if the exercise is not computed properly, double taxation of income is sure to arise.

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New B.O.I. Regulations Under the C.T.A. are Issued by FinCEN

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New B.O.I. Regulations Under the C.T.A. are Issued by FinCEN

On Friday, March 21, 2025, the Financial Crimes Enforcement Network (“FinCEN”) submitted an interim final rule narrowing the existing beneficial ownership information (“B.O.I.”) reporting requirements under the Corporate Transparency Act (the “C.T.A.”). Entities previously defined as “domestic reporting companies” now are exempted from the reporting requirements. They do not have to report B.O.I. to FinCEN, or update or correct B.O.I. previously reported to FinCEN. With limited exceptions, the interim final rule does not change the existing filing requirement for foreign reporting companies. As a service to our readers, particularly those based outside the U.S., Insights has published significant excerpts from the preamble of the FinCEN interim regulations, with footnotes deleted. The preamble explains the change in rules, and does so in plain English.

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Another Taxpayer Allowed Treaty-Based Foreign Tax Credit Against N.I.I.T.

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Another Taxpayer Allowed Treaty-Based Foreign Tax Credit Against N.I.I.T.

The application of the foreign tax credit to the net investment income tax (“N.I.I.T.”) has been a recurring battle in courtrooms in recent years. In the most recent installment, the taxpayer in Bruyea v. U.S. prevailed in claiming a foreign tax credit under the Canada-U.S. income tax treaty. The N.I.I.T. is a 3.8% tax on certain items of passive income that is levied on U.S. individuals whose gross income is above certain thresholds. The position of the I.R.S. is that the foreign tax credit cannot be claimed to reduce the amount of N.I.I.T. that is due. In the facts of the case, the Canada-U.S. Income Tax Treaty clearly provided that the foreign tax credit applies to all U.S. taxes based on income whether in existence at the time the treaty came into force and effect or afterwards. Wooyoung Lee explains all.

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Insights Volume 12 Number 1: Updates & Other Tidbits

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Insights Volume 12 Number 1: Updates & Other Tidbits

This month, Tidbits returns to Insights. One tidbit addresses the on-again / off-again status of the Corporate Transparency Act. A second tidbit addresses a rare win for an individual who challenged taxation at the state level.

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Corporate Matters: Ending a Business Relationship – A Time Consuming and Drawn-Out Process

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Corporate Matters: Ending a Business Relationship – A Time Consuming and Drawn-Out Process

Often the realities of a business arrangement can be quite different than a plan conceived between optimistic partners. Market conditions can change, and commitments made can become difficult to deliver, sometimes through no lack of trying. As business attorneys, we have seen situations where one partner brings technical and production know-how, and another brings the promise of market introductions and sales contacts. In an article based on many years of practice, Simon Prisk advises that breaking up a business partnership can be difficult and emotional. If the organizational documents are simply taken from a form book, the partners will face a time of uncertainty as off-the-shelf documents rarely provide helpful solutions.

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