NBCC were pleased to recently interview our new tax partner Deloitte, to discuss the post-Brexit Dutch and British fiscal climate and attractiveness, the effects of digitalization on tax, and the role of Deloitte as NBCC tax partner. Deloitte is the largest and leading company globally, offering professional services in accounting, risk services, financial advisory services, consulting, tax and legal. In this interview, we talk with Willem Gooskens, Rebecca Pehlivan and Rob Swenne.
Willem Gooskens is International Tax Partner and client and industries leader for Deloitte tax and legal. He supports clients with international corporate tax matters, from assessing new tax legislation impacts, European and international directives, and transition planning.
Rebecca Pehlivan is Global Trade Advisory Practice Partner, mainly working on trade flows in the energy sector. The impact of Brexit on the supply chain and customs is a relevant topic for many of Deloitte's clients. The Deloitte Global Trade Advisory Practice strongly focused on digitizing and automating customs processes and developed their own customs management system to implement at the client site. They also take over complete import and export processes for trade flows between NL and UK.
Rob Swenne is head of the Brexit bureau in the Netherlands and has been with Deloitte for over 30 years, specializing in international VAT. Deloitte's daily business is servicing companies with daily problems such as optimizing taxes and ensuring compliance to prevent disturbances to their supply chain. There is more distortion in the supply chain now, and restructuring is needed.
When it comes to investments, are there opportunities or fundamental problems within the Dutch or the British tax system that stimulate/hinder investment? What are the implications for NL-UK / UK-NL investments?
Willem: The UK and the Netherlands have been important trade partners since the inception of our countries. The UK was the largest investor in the Netherlands, even during Brexit. Although the flow of goods and services decreased post-Brexit, 2021's last two quarters have seen a significant uplift.
Rebecca: The loss of the UK's participation in the EU single market and the new customs border complicates the movement of goods between the EU and the UK. There is a potential impact on customs duty (cost) and an increased compliance burden. Also, certain UK and EU national requirements regarding indirect taxes are no longer aligned, and taxes regarding environmental and sustainability goals are approached differently.
Post-Brexit: how does the Dutch fiscal climate compare to the UK? What has changed?
Willem: There's not much impact on direct tax at the country level. Most disruptions are in the indirect tax field. In all honesty, I expected the UK to become more attractive and competitive. Instead, the UK is committed to tackling tax avoidance like the US and raising corporate tax rates in line with Dutch rates.
Rob: However, the impact on direct tax may still come in the future. Too much change complicates things. There are different worries at the moment.
Rebecca: In the EU, the Carbon Border Adjustment Mechanism (CBAM) will be introduced, and the Energy Taxation Directive will be updated to support the EU climate targets. The UK has introduced a plastic packaging tax and is initiating other (border) taxes that focus on their climate goals, however, with less uniformity than before.
How do the UK and NL compare in terms of fiscal attractiveness? Was the decision of Shell and Unilever to move their HQ to the UK based on fiscal criteria?
Willem: The Netherlands is currently in 12th place and the UK in 22nd place in the fiscal competitiveness index. The Netherlands rank higher due to consumption taxation and property taxes. Interestingly, these positions are stable when we expected deterioration due to the loss of some crown jewel companies.
Unilever and Shell are, of course, sensitive losses for the Netherlands, they have roots in both countries, but both chose the UK. The Unilever, one of the reasons mentioned in the press was the competitiveness of the UK in the capital market and the fear of being removed from the FTSE index when Rotterdam was chosen. Shell indicated its dual structure hindered the company's execution of its energy transition strategy. The 15% dividend withholding on Dutch shares has historically capped the ability to execute quarterly buybacks and complicated acquisitions, Shell has said in the Financial Times.
What do you think of the Dutch investment climate compared to the UK's? And are you worried? What advice do you give to the Dutch government?
Willem: The Netherlands could have done a better job attracting regulated financial companies, not just nonregulated ones. Bonus cap rules in the Netherlands are a burden for regulated companies. However, the Netherlands' strong ecosystem does attract new businesses from all over the world. I would advise keeping investing in education. As a knowledge-based economy, we should keep our 30% ruling, incentivizing skilled workers to come to the Netherlands.
You supported the NBCC YR 1 Brexit research together with the NBCC. What conclusions did you see?
Rebecca: From an operational perspective, I expect a lot of businesses are more prepared and organized than one year ago in moving their goods across the EU and UK's borders. After cleaning up the potential backlog of the allowed delayed import declarations in the UK, we see now that companies focus on optimizing their supply chain from an organizational and customs duty burden perspective. For example, using preferential origin can lower the payment of import duties. However, the right documentation to substantiate the preferential origin is required. At the beginning of Brexit, companies focused on bringing the goods in. Now they apply for retroactive repayment of duties paid and optimization of customs duties for future shipments.
What were the most Frequently asked questions on Brexit in the past year?
Rob: Those questions are about registrations, custom duties, and supply chain efficiency. For example, companies take the REC and goods shipped to Northern Ireland can be moved by truck through England. The trade deal between the EU and UK has specific rules about the origin to prevent unnecessary customs duty payments, so we had many questions about that.
Rebecca: During Brexit, "how can we make sure our goods will cross the border" became "how do we make sure our goods cross the border in an efficient, optimal, and compliant manner".
With the EU's proposed digital tax plan, there have been a lot of discussions recently on the digital economy. What are your views on the subject?
Rob: Ten years ago, purchasing something online was alien. The digital world exploded, especially during COVID. It is easy to buy goods in China and ship them to Europe. The tax was written before the online world and is not prepared. Now, people understand that splitting where we pay tax might be fair. The EU is developing a system which is not yet accepted, but the longer we take to discuss this, the more difference there will be between the tax and digital world.
How is digitalization/technology changing the world of tax?
Rob: Many countries require real-time reporting so tax authorities can spot issues immediately. In Spain, companies report SSSII every four working days. In Italy, e-invoicing is mandatory. Multinational companies need to be prepared - the next step is real-time invoice reporting. Deloitte is one of the most advanced companies. For that, our specialists prepare companies for the digital world.
Willem: International pressure means new direct tax regulations, making it harder for clients to comply. The only answer is to automate at least some tax processes. A good example is the impact of Pillar 2, which forces taxpayers to get the right data to comply with these new rules, which calls for more automation and technology. We also see clients moving towards automation of their tax accounting. There is momentum now as companies are upgrading their ERP systems to next-generation cloud-based systems such as Oracle Cloud and SAP S/4Hana. We help our clients in tax departments stay on top of these transitions and not miss out on the opportunities.
What challenges do you see coming in the future for taxation? Is the tax world ready to face these challenges?
Rob: I believe there are two main issues; the new digital tech structure and the minimum corporate tax rate.
Willem: Members of the OECD (Organisation for Economic Co-operation and Development) are committed to complying with minimal taxation of 15% for corporations (pillar 2), which will hugely impact companies in 2023 with annual revenues above 750 million.
What is the role of tax professionals to be ready for a constantly changing / challenging environment?
Rebecca: The world of taxes is constantly changing. New taxes are introduced while existing taxes are being modified to address digitalization and climate change challenges. Tax professionals can play a role in shaping the business's perceptions of taxes and contribute to a constructive dialogue with governments when policy and priorities are rapidly shifting.
What makes NBCC different from other NL-UK organizations?
Rob: We have been in contact with NBCC for over half a year and have seen their massive network in politics, business, and government and with NGOs. We have seen and made many professional relationships through the NBCC. It's a dynamic organization that quickly spots new developments. We also follow developments to always be ahead as clients ask our advice, that is why we make a good combination.
What makes Deloitte a great strategic partner to NBCC? Can you give a few examples of how Deloitte can help NBCC members?
Rob: With our specific knowledge and skills, we can assist NBCC members by informing and advising them about new developments. As members of the NBCC, we need to act as friends who help each other. We are also in the UK's Global Trade Bureau, which can be helpful for companies on customs issues.
What are Deloitte's competitive advantages in tax advisory in the Netherlands and the UK? Is it the mentioned Global Trade Bureau? Can you let us know more about it?
Rebecca: Together with the UK and EU office branches, we are one Deloitte member firm, currently the largest customs and indirect tax practice in the region. Next to our advisory services, we also provide tax automation, outsourcing, and import and export clearance services for our clients in an integrated approach between our teams. An example strongly related to Brexit, we provide import and export clearance services for our clients in a combined approach between our UK and NL Deloitte teams. We also add other tax-related services such as VAT, Transfer pricing, etc., and we can connect our Consulting and Risk Advisory teams. Our focus for 2022 and beyond is on optimally serving the end-to-end supply chain of our clients and all the NBCC members.
Following up on that, what kind of activities and themes would you like to focus on with the NBCC for its members in 2022?
Rob: We constantly monitor developments on Brexit and the digitization of taxes. Questions like "What happens if the UK does not want to maintain the Irish protocol" and "What will be the impact on indirect tax if they do not maintain the border in the RIC" are often on our minds.
Willem: We will also be focusing on global changes like a tax reset and international and sustainable taxation and will continue to be very vocal on that subject in the coming year.
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