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Dutch-Polish DTA To Feature New BEPS, Pension Provisions

Tuesday, November 17, 2020

The Netherlands and Poland have agreed to make changes to their tax treaty, to add provisions to prevent tax base erosion and profit shifting (BEPS), and amend provisions relating to the taxation of pensions income.

Under the revised agreement, the distribution of taxing rights for pensions income will be adjusted. At present, private pensions and annuities are taxed at source, providing several conditions are met. Under the revised agreement, these conditions would be removed. As a consequence, the Netherlands will be able to levy tax on all Dutch pensions and social security benefits paid to residents of Poland, providing such benefits have accrued in the Netherlands. Poland may also tax the income received by its residents but must provide double tax relief.

The Dutch Ministry of Finance also said the revised agreement will feature changes to capital gains tax provisions for immovable property investors.

The Ministry said the agreement also introduces provisions from the OECD's BEPS minimum standards and the new preamble that precludes the double tax treaty from being used by taxpayers to derive tax benefits in inappropriate circumstances, such as through treaty shopping, or to use the treaty to achieve double non-taxation.