Board resolutions by online meetings: approval of the State Secretary of Finance
1 July 2020 – We previously wrote about the risks involved in taking board resolutions remotely. On 15 June 2020, a statement was made by the Dutch State Secretary of Finance regarding the problem that potentially would arise for the application of the Dutch substance requirements. In this contribution we provide you with an update.
SUBSTANCE
In order to comply with the Dutch substance requirements, board decisions should be taken in the Netherlands. In our contribution of 22 April 2020, we believed that, under certain conditions, the travel restrictions during the COVID-19 pandemic should not lead to adverse tax consequences.
On 3 April 2020, the OECD has stated that, in their opinion, the absence of a physical presence, for a short period of time under COVID-19 restrictions should not lead to a change of the place of effective management of a company. In their letter of 15 June 2020, the State Secretary of Finance expressed that the travel restrictions resulting from the COVID-19 pandemic will be taken into account when enforcing the substance requirements. However, no concrete commitments have been made, nor have any concrete examples been outlined.
BOARD RESOLUTIONS BY VIDEO CONFERENCING
In our view this implies that board resolutions can also be made by video conferences. Even if not all board members are located in the Netherlands as a result of the travel restrictions, the substance requirements may therefore still be met.
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