Dutch ruling praxis.

Dutch government publishes new decree on international tax ruling practice 


Global Tax Alert


April 23, 2019.

The Dutch State Secretary of Finance (the State Secretary) published a draft decree (the Decree) on the Dutch tax ruling practice pertaining to tax rulings relating to cross-border structures. The publication of the Decree follows a letter written by the State Secretary published on November 22, 2018 in which he announced the implementation of measures to update the Dutch international tax ruling practice. That letter was covered in a previous alert.

The measures in the Decree are focussed on the contents of rulings, the ruling process, and transparency. The key elements of these measures are summarized below.

It is anticipated that the Decree will enter into force on July 1, 2019. In that regard, part of the legislative process, debate on the Decree in the House of Representatives will take place on June 4, 2019.

1. Content

Taxpayers wishing to obtain an international tax ruling will be required to meet the following conditions: 

  • The taxpayer requesting a ruling needs to be part of a concern that has so-called “economic nexus” with the Netherlands, meaning that its presence needs to relate to operational activities in the Netherlands that are carried out for the benefit and the risk of the taxpayer. These activities need to fit with the function of the taxpayer. For example, consideration must be given to whether the company employs enough people in relation to its overall size and/or its activities in the Netherlands. As an exception to this main rule, in the event that the taxpayer requests a ruling in relation to the Dutch non-resident taxation rules (art. 17 and art. 17a of the Corporate Income Tax (CIT)), such economic nexus is not required. For example, a Luxembourg tax resident company owning an interest in a Dutch holding company can obtain a ruling on the Dutch non-resident taxation rules irrespective of whether the Dutch holding company has economic nexus in the Netherlands.
  • A ruling will not be granted if: i) the sole or primary purpose of the transaction is to save Dutch or foreign taxes; or
  • ii) the direct transaction relates to an entity or a permanent establishment located in a jurisdiction that has been included on the so-called ‘Dutch blacklist’ of 21 low-taxed jurisdictions and non-cooperative jurisdictions.2


Under the Decree, international tax rulings will be issued with a maximum term of five years. Exceptions will be possible in case where the facts and circumstances require a longer term (e.g. in cases of long-term contracts). In such cases, the maximum term can be ten years, where halfway through the term of the ruling, an evaluation will occur. 

Required Information

A taxpayer that wishes to obtain a ruling is required to submit all of the information that is required to adequately assess the ruling request. The extent of the information required and the level of detail will be determined on a case-by-case basis.

In the case of an Advance Tax Ruling (ATR) request, the information provided should include a detailed description of the relevant facts and circumstances, an overview of all parties, jurisdictions and financial years involved, a brief historic and organizational overview of the structure or the business concern, the position the taxpayer wishes to take and the tax consequences pertaining to that position, and the statement that the beneficial owners / directors involved with the structure are not resident in a jurisdiction on the ‘EU-sanction list’.3

In the case of an Advance Pricing Agreement (APA) request, additional information may be required, including the group’s ‘Master File’, financial details of the transaction, the transfer pricing methodology used (and why that methodology is appropriate), key assumptions made, a description of how changes in facts and circumstances would affect the outcome or the term during which the APA would remain applicable, the contractual terms and conditions of the inter-company relations, the company’s business strategy, and a description of the applicable market conditions. 

Furthermore, the taxpayer must include an analysis as to why the information provided satisfy the aforementioned requirements to obtain a ruling (economic nexus is present in the Netherlands, tax savings is not the sole or primary reason for the structure, and there is no direct relation with a low-taxed or non-cooperative jurisdiction).

2. The application process

The Decree contains a fairly detailed description of what the application process will look like and which parties and which governmental agencies will play a role in the process. As part of the process a new committee within the Dutch Tax Authorities (the “Committee on International Fiscal Assurance” or “C-IFA”) will be formed, which will be involved with, and responsible for, the issuance and coordination of all international tax rulings, all with a view to satisfy the need to i) increase transparency; (ii) centralize the ruling process; and (iii) harmonize the content of international tax rulings. The C-IFA will replace the existing ATR/APA team.

General ruling process

Within the Dutch tax authorities there are several parties that are involved in the process for issuing international tax rulings. Which party is involved and what the application process looks like depends on the nature of the request.

  • A ruling request is generally submitted to the ‘normal’ tax inspector assigned to the taxpayer. This tax inspector will subsequently involve the so-called “Handling Team” in the International Fiscal Assurance when the ruling pertains to certain subjects (see below) (i.e., the “Normal Route”); or 
  •  In the case of a potential new foreign investor, the ruling request is filed with the so-called “Greenfield Team” (i.e., the “Greenfield Route”);

Topics for which the Handling Team needs to be involved are as follows: 

  • Application of the Dutch participation exemption
  • Qualifications of hybrid entities or instruments for Dutch tax purposes
  • The application of the recent Dutch CFC rules
  • The non-applicability of Dutch non-resident tax rules
  • The existence of inbound or outbound permanent establishments (PE’s) and the profit allocation to such PE
  • The qualification of a Dutch ‘cooperative’ as withholding agent for dividend withholding tax purposes
  • The application of the so-called ‘principal purpose test’ in tax treaties (in view if implementation of the ‘multilateral instrument’ (MLI)
  • The arm’s length nature of intra-group transactions
  • Whether or not entities are to be seen as ‘affiliates’ that are subject to transfer pricing rules
  • Whether transactions are to be viewed as ‘group services’ (generally resulting in taxable remuneration) or should be viewed as activities conducted within the capital characterization (i.e., not taxable)

Responsibilities of C-IFA

The ‘first handlers’ will liaise with C-IFA, and will jointly coordinate with the relevant knowledge groups within the Dutch tax authorities on the matters at hand where necessary.

C-IFA will be responsible for central coordination pertaining to international tax rulings, and, as noted above, will be involved in all international tax ruling requests to (i) safeguard cohesion in policy and implementation, (ii) to ensure high quality and standards of rulings issued, and (iii) to ensure correct application of case law and procedural rules. Ruling requests submitted to the ‘first handlers’ will always be presented subsequently to the C-IFA for approval. A successful application process results in a so-called ‘settlement agreement’ (i.e., the “Ruling”) between the taxpayer and the Dutch tax authorities.

3. Transparency

In an attempt to increase transparency, every international tax ruling will be summarized and made publically available. These summaries will include basic facts and circumstances, the main conclusions from transfer pricing reports or other supporting documents that are relevant, and a brief analysis on the basis of applicable law leading to the conclusions reached in the Ruling.

If a request to issue a Ruling is denied or rejected, a summary will also be published, from which it can be deduced why a Ruling could not be issued.

Taxpayers are assured that the abovementioned summaries will be redacted in such a way that third parties will not be able to identify the parties involved in the ruling request.

Key Takeaways

The Dutch tax ruling practice has a long and well-established track record of being very investor-friendly. The Dutch tax authorities generally take a cooperative position and work with taxpayers where they can support the idea of giving upfront certainty to taxpayers in the form of an ATR or APA. This is evidenced by the fact that in 2018, roughly 85-90% of the ATR and APA requests have resulted in a positive ruling being issued. This high rate of success is evidence of the fact that the Netherlands has a stable and transparent government and has sought continuous alignment of the Dutch tax rules with international and OECD standards.

The implementation of the Decree does not signify a change in this investor-friendly approach. Further, it is noteworthy that when announcing the implementation of the Decree the State Secretary repeatedly mentions that it is the aim of the Dutch government to ensure that the Netherlands remains an attractive jurisdiction for investments involving real economic activities. The corporate income tax rate is being lowered to 20.5%, and other incentives are available for ‘real’ businesses. 

Said differently, the purpose of the Decree is to ensure that the Netherlands remains an attractive jurisdiction for (foreign) investors and to prevent abusive situation where taxpayers use the Netherlands as a so-called ‘conduit jurisdiction’ for directing funds and assets to tax havens.

It should be kept in mind also that international tax rulings can provide a level of comfort, but that they are not mandatory. It goes without saying, that non-controversial structures can be implemented without obtaining an international tax ruling.


The current list includes American Samoa, Anguilla, the Bahamas, Bahrain, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, Guam, Guernsey, the Isle of Man, Jersey, Kuwait, Kingdom of Saudi Arabia, Qatar, Samoa, the Turks and Caicos Islands, Trinidad and Tobago, the UAE, US Virgin Islands and Vanuatu.

Reference in the Decree is made to the Dutch blacklist. However, the wording in the Decree seems to suggest that it was intended to refer to a (EU) sanction list.

2019 Copyright DLA Piper

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