Recent developments regarding the credit for foreign withholding taxes in relation to derivatives

After much debate and case law, it is now generally recognized that in respect of Dutch income tax treaties concluded after 1980 referring to the relevant Dutch domestic rules concerning the avoidance of double taxation, only net income should be taken into account for purposes of the second of two limitations. This article elaborates on recent developments concerning the scope of the term "related costs" and, where appropriate, considers the potential bearing thereof on the treatment of derivatives in this context.