The Dutch House of Representatives is expected to debate the
proposals on June 4 2019, which leaves a short time to
implement the new ruling practice before July 1 2019.
Here we provide an overview of the renewed Dutch ruling
practice. The information in this article is based on recent
tax policy documents of the Dutch government (last documents
are dated April 23 2019).
On April 23 2019, prior to the House of Representatives'
Finance Committee's general consultation on the renewed ruling
practice (originally planned for April 24 2019 but moved to
June 4 2019), the Dutch State Secretary of Finance's proposals,
including a draft decree, was published.
The ruling process that applies to international tax rulings
will be coordinated by one centralised team: the Body for
International Tax Assurance. This body will replace the APA/ATR
team. The body will function as the principal point of contact
for all tax rulings within an international context.
Currently, rulings are granted if a number of substance
requirements are met. This will change. Instead of meeting
substance requirements, the group (of companies) wishing to
obtain an APA/ATR must have an economic nexus with the
Netherlands, that is the taxpayer must perform operational
activities in the Netherlands and have sufficient employees
relevant to those operational activities in the
In addition to the economic nexus, no ruling will be granted
if it is deemed the taxpayer is:
- Avoiding Dutch or foreign tax is the sole
or main motive for the transaction(s); or
- The ruling covers direct transactions with
entities that are established in jurisdictions that are on
the Dutch list of low tax jurisdictions.
Content of tax rulings
The topics that will be handled by the Body for
International Tax Assurance include:
- The application of the participation
- The qualification of hybrid financial
instruments or hybrid entities in international
- The application of the controlled foreign
company (CFC) rules;
- The presence or absence of a permanent
establishment (PE) in the Netherlands;
- The presence or absence of a PE in another
jurisdiction for a company that is a tax resident of the
- The application of interest on
non-resident taxation rules;
- The presence of a PE in Bonaire, Sint
Eustatius or Saba (the Caribbean Netherlands) for a company
that is a tax resident of Aruba, Curacao or Sint
- The application of the Dutch enterprise
non-resident taxation rules;
- The application of the holding cooperative
rules for the Dutch dividend withholding tax (WHT);
- The application of the domestic
withholding exemption of the Dutch dividend WHT;
- The application of the principal purpose
test in tax treaties in relation to dividends, interest and
- The allocation of assets and/or risks to
- The conclusion of an APA;
- The question of whether companies are
associated enterprises in the context of Article 8b of the
Dutch Corporate Income Tax Act (CITA); and
- The question whether an activity qualifies
as an inter-company service or whether the activity qualifies
as a shareholder activity.
Transparency of the ruling practice
Due to the controversial perception of tax rulings, the
Dutch State Secretary of Finance intends to increase
transparency of the tax ruling process.
In addition to the exchange tax ruling templates that are
already completed and automatically exchanged between EU member
states and the APA/ATR team, anonymised summaries of rulings
will be published under the new ruling practice.
The renewal of the Dutch ruling process seeks to raise the
standard of Dutch tax rulings (APAs and ATRs) that provide
greater advance certainty to cross-border transactions.
Although it may become more difficult to obtain an APA/ATR
for companies lacking economic substance in the Netherlands,
the Netherlands is still open for business for companies with
operational activities in the country.
Jian-Cheng Ku (email@example.com) and Rhys Bane (firstname.lastname@example.org)
DLA Piper Netherlands