The Netherlands Announces Stricter Requirement For International Tax Ruling

; posted on
November 27th, 2018

The Dutch Ministry of Finance has announced that from 1 July 2019, stricter requirements will be put in place for the issuance of advance tax rulings with an international character. The proposal aims to prevent the Netherlands from being used as a conduit to tax havens where a company with undesired international structures (e.g., lack relevant substance) maintaining an accessible and robust ruling process for genuine operations.

Transparency

The State Secretary has announced that an anonymized summary of all international tax rulings will be made publicly available. It should not be possible to trace any summary back to a specific taxpayer, and as such the government will safeguard taxpayers’ privacy and confidentiality of personal data. The Ministry of Finance will continue to publish an annual report on the policy on international tax rulings and other rulings.

Additionally, independent experts will continue to investigate annually whether the rulings that have been issued are lawful and in accordance with the rules.

Stricter Requirements

The ruling would not be issued to a company with the following conditions:

  • The decisive aim in requesting the ruling is to avoid Dutch or foreign tax.
  • The companies requesting the ruling are based in low tax countries (listed jurisdictions with a (statutory) corporate income tax rate below 9%) or which are on the European Union’s blacklist
  • The company does not have sufficient economic nexus in the Netherlands. The economic nexus satisfies if the company is employing enough people in relation to its overall size or its activities in the Netherlands, the Dutch entity conduct operational activities for its own account and risk, the activities performed by the Dutch entity in line with the function of the Dutch entity within the Group, and in relation to its operational activities, the Dutch entity incur an appropriate amount of operational costs.

The maximum term for new rulings will be five years, although the term may be extended to 10 years in exceptional circumstances, with an intermediate reassessment after the initial five years (currently, rulings typically are granted for 10 years).

Process

All rulings with an international character will be handled by one centralized team at the Dutch tax authorities. This currently already applies with respect to advance pricing agreement (APAs) and advance tax rulings (ATRs).

Source: Dutch Government

Follow us by Newsfeed and Social Media

Our digital platform enhances your TP experience and is ready to let you discover new and related content.
It provides a range of social features:

- Links to Social media (LinkedIn, Twitter, Facebook, YouTube and Xing)
- Sharing TPA Global updates by Newsfeed (personal e-mail)
- Discuss key issues with our TPA Global team members via blogs and social media

Copyright © 2018
Transfer Pricing Associates BV.
All rights reserved.
 

H.J.E. Wenckebachweg 210
1096 AS Amsterdam
T: +31 20 462 3530
E: info@tpa-global.com
I: www.tpa-global.com