The measures are designed to allow public scrutiny of
rulings and prevent the use of shell companies, and is part of
a broader drive by the Netherlands to prevent itself being
seen, and used, as a pipeline to tax havens.
"We are not afraid for tax rulings [to be] made public,"
said the head of tax at an investment group. "This will create
a bit more understanding in an environment that demands more
"The government ensures that our private data will not be
open for other competitors. We have no problems with that," he
continued. "In fact, it could help us, [in that] we can learn
from public rulings. This could improve our tax position."
While the Netherlands is opening up its tax rulings to the
public, it’s worth noting that its policies for
granting them will not change as a direct result of this
– though the European nation has tightened up its
rules in this regard during 2018.
"The most important thing is that the DTA will keep
providing certainty to its taxpayers," added the source.
A spokeswoman at the Dutch Ministry of Finance confirmed:
"The Tax and Customs Administration will publish an anonymised
summary of each international ruling it issues directly, and
will also publish an annual report."
Why make the change
There are multiple factors which have pressured the Dutch
government into being stricter with its tax rulings, and now
electing to make them public.
"Many people associate the issuing of rulings with shady
practices. But a ruling gives companies nothing more or less
than prior clarity about the method of taxation based on the
law," said Secretary of State Menno Snel. "We plan to make
substantial changes to the law in the years to come in order to
prevent the Netherlands from being used as a conduit to tax
havens. We are also tightening up the rules for issuing
rulings, and making this transparent for all concerned."
The country fell foul of a high-profile
state aid investigation into the tax ruling it had in place
with Starbucks, at which time the European Commission also
ruled against an arrangement Luxembourg had with Fiat.
While both countries are appealing, the negative publicity
associated with tax rulings that drastically reduce tax bills
has been enough to put many companies off. Rulings concluded
today rarely result in a significant tax saving.
"It is a situation you don’t want to be in,"
said an international tax director whose company has been
involved in a state aid investigation. "The taxpayer is not
even informed or consulted. The taxpayer may not even know. The
process is between the Commission and the country."
The main point of most tax rulings, as Snel asserts, is to
provide certainty for tax authority and taxpayer, and risking
falling foul of the EC means there’s no certainty
at all. Consequently, aggressive tax rulings are not as
Furthermore, since the implementation of EU Directive
2015/2376 (DAC 3) on January 1 2017, tax authorities have
already been exchanging information between themselves on
rulings and advance pricing agreements (APAs). Some countries
did this earlier, due to BEPS Action 5.
"The Netherlands was already fully transparent with
exchanging information with other European tax authorities,"
said the spokeswoman. "With this we’re taking a
step further by making an anonymised summary of each
international ruling public. By our knowledge this practice is
already being done in Belgium as well. The government supports
the European Commission’s proposals for greater
Therefore, this step by the Netherlands is not revealing new
information to tax authorities who might use it against them in
audits. The only parties of note gaining access to the
information are the public, and other companies.
It stands to reason that public reporting of tax rulings
does not put companies off using them. Instead
it’s state aid pressure and EU rules that have
changed the way companies use tax rulings.
In the two years following the Luxleaks scandal, where the
tax arrangements including tax rulings of many multinational
companies were laid bare, the number of tax rulings increased
by 160%, according to figures by the European Network on Debt
and Development (Eurodad).
That leaves, then, the thorny issue of commercial
considerations – often cited in discussion drafts as a
reason not to introduce further transparency measures.
But the head of tax at a chemical company which occasionally
uses rulings and APAs, said: "I never thought that
competitiveness of companies had to apply in tax. Cash saving,
whatever its source, gives more tools to enterprises. I have
always shared tax practices with my peers."
The head of tax at the investment group added: "The most
important parameters are not visible." He added that the
stricter rules mentioned by Snel have already been implemented,
and are "against shell companies whom are used to avoiding
taxation – we are not driven by that".
The positive reaction from companies shows that transparency
measures are not always something to be feared, and can in fact
dispel public misconceptions about the way multinationals pay
tax and pay a reputational dividend.