This content is from: Netherlands
Netherlands: The documentation requirements of ATAD II in the Netherlands explained
Jian-Cheng Ku and Rhys Bane of DLA Piper explain how the Netherlands have approached the documentation requirement introduced by the implementation of ATAD II

On May 29 2017, the European Council adopted the Anti-Tax Avoidance Directive II (ATAD II). This directive requires EU member states to introduce rules targeting deduction/non-inclusion and double deduction outcomes (collectively referred to as hybrid mismatches) by December 31 2019 and is based on the OECD’s base erosion and profit shifting (BEPS) Action 2 report.
- Companies are associated enterprises in case of a shareholding of 25% (share capital, voting rights or right to profits), instead of 50%; and
- The introduction of a documentation requirement specific to the hybrid mismatch rules introduced by ATAD II.
- If the position is taken in the corporate income tax returns that the hybrid mismatch rules do not apply, they must have documentation in their administration substantiating this fact; and
- If the position is taken in the corporate income tax returns that the hybrid mismatch rules do apply, they must have documentation in their administration substantiating to which extent the hybrid mismatch rules apply.
- Worldwide organisational charts;
- An assessment (internal or external) of the financial instruments, hybrid entities and permanent establishments used on the basis of the relevant foreign and Dutch tax law;
- Foreign tax assessments, if the tax treatment of the financial instruments, hybrid entities and permanent establishments used is included in such assessments;
- Foreign tax returns, if the tax treatment of the financial instruments, hybrid entities and permanent establishments used is included in such returns;
- An opinion of an expert in the area of foreign tax law; and
- If the hybrid mismatch rules apply, a substantiated calculation of the applied adjustment.
- Taxpayers having to prove foreign law. Under Dutch administrative law, the judiciary (and in extension therefore the Dutch tax authorities) have to established foreign law ex officio. This means that if the corporate income tax assessment is appealed, it is principally up to the Dutch tax authorities and the judiciary to establish the applicable foreign law; and
- Taxpayers have to provide documentation to the Dutch tax authorities upon request. However, under the fair play principle (one of the general principles of proper administration), taxpayers generally do not have to provide tax advice (which relates to their specific tax position) from tax advisors.
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