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    Implementation renewed Dutch ruling practice

    As per 1 July 2019, a new Decree on international tax rulings [1] (including Advance Pricing Agreements and Advance Tax Rulings), entered into force. The Decree of 19 June 2019 replaces the previous Decrees of 3 June 2014. However, rulings signed before 1 July 2019 will not be impacted and will remain effective until their expiration date.

    In the below we will briefly address some of the key changes addressed by the new Decree and also provide some initial comments.

    The competent tax inspector of the Dutch taxpayer will be involved in the ruling procedure together with the Handling team International Fiscal Assurance (“Behandelteam Internationale Fiscale Zekerheid”, hereafter “Handling Team IFA” ), a new handling-team of the Dutch tax administration focused on international tax rulings.

    In order to ensure a coordinated effort and a consistent policy, execution and quality a new supervisory body, the College International Fiscal Assurance (“College Internationale Fiscale Zekerheid”, hereafter “College IFA”) is established. This supervisory body is responsible for central coordination and supervision of the ruling procedures.

    All rulings will have to be formalised through a formal settlement agreement (“vaststellingsovereenkomst”) signed by both the Dutch tax administration and the taxpayer involved. In all cases the new College IFA and the tax inspector will need to be the signatories. If the Handling team IFA is the primary/first handler of the case their signature is required as well.

    Comment QG:
    A similar procedure has been in place already for obtaining Dutch APAs and has proven to be quite effective. However, as the new supervisory body will have a much broader scope it remains to be seen whether the new procedure will remain as effective or will result in more lengthy procedures. We hope and expect individual members of the College IFA will be mandated in respect of specific procedures (e.g. the APA procedure) to facilitate a quick turn around of individual cases.

    The new Decree further lists the issues that will be specifically covered by the Handling Team IFA in detail. These issues include amongst others:

    • qualification of hybrid financing structures;
    • existence of a permanent establishment;
    • allocation of assets and risks to a permanent establishment;
    • application of the principle purpose test and the main purpose test under tax treaties;
    • establishing Advance Pricing Agreements (“APAs”).

    The Decree provides for a detailed list of issues that will need to be addressed in a settlement agreement.

    The College IFA will also be responsible for handling requests in respect of the application of tax treaties regarding the corporate tie-breaker rules and limitation on benefits rules. Decisions of the College IFA on such requests are not considered settlement agreements and all relevant treaty procedures remain applicable. The College IFA is acting as competent authority in respect of such requests.

    No certainty in advance for certain cases
    In order to avoid facilitating international tax avoidance, certainty will only be provided in the following circumstances:

    • there is enough economic nexus in the Netherlands (i.e. the ruling requesting entity should be part of a group performing operational activities in the Netherlands);
    • operational activities are performed for the risk and account of the ruling requesting entity by a sufficient number of Dutch based employees; and
    • the operational activities should fit the functions of the ruling requesting entity within the group.


    A tax ruling will furthermore not be concluded if:

    • the main purpose of the structure or transaction is to save Dutch or foreign taxes; or
    • the ruling involves transactions with related entities located in low-tax jurisdictions ( i.e. countries with low statutory tax rates and/or listed as non-cooperative countries).


    Comment QG:
    Although the Decree is aimed at obtaining and maintaining consistency in the ruling practice, the economic nexus approach is a new and open criterion that will need practical implementation. Even if the tax administration will publish practical examples of the application of the economic nexus approach, this will not take away the fact that different views will arise on a case by case basis on whether there is sufficient economic nexus or not. The tax administration will face quite a challenge to build a reasonable and consistent practice that will allow taxpayers to anticipate future options.

    Unfortunately, the strict implementation of the list of low tax jurisdictions seems to make it impossible to obtain certainty in advance in respect of valid business activities performed in those countries. The Dutch Decree does not provide for any nuance in respect of the activities performed.

    An anonymised summary of each international tax ruling will be published. In this summary the following will be addressed:

    • relevant facts and circumstances;
    • (to the extent applicable) the main conclusions of transfer pricing reports or other documents;
    • analysis of the relevant laws and regulations in respect of the requested certainty;
    • conclusion of the case that supports the settlement agreement.


    A summary will also be published if a ruling procedure was initiated but no ruling is obtained in the end. The summary will then include an explanation of why the ruling was not obtained.

    Comment QG:
    The Decree indicates that summaries will be anonymised in such a way that rulings will not be traceable to an individual taxpayer. However it remains to be seen whether the tax administration’s summaries are indeed not traceable to the relevant taxpayer. Given the sensitivity of the matter it would be sensible to involve the taxpayer in drafting an appropriate summary. Unfortunately the Decree does not provide any indication of active taxpayer involvement.

    A common approach to evaluating the feasibility of a ruling is to have a pre-filing meeting with the tax administration. We feel that such a pre-filing meeting should not be considered part of the formal ruling procedure and therefore a taxpayer’s decision not to further pursue a formal ruling after having a pre-filing meeting should not trigger any publication. As the Decree is not sufficiently clear in this respect we hope and expect that the tax administration will provide further clarity on this in order to allow taxpayers to make an informed decision about investigating the feasibility of a ruling.

    Required information
    The Decree provides for a detailed list of relevant information that will need to be included in a ruling request. Most of the requested information is similar to the requirements provided in earlier Decrees. However, there are some additional requirements introduced. Additional information requirements include:

    • a clear unilateral position on the tax consequences of the intended ruling;
    • an analysis on the financial impact of the APA for the duration of the APA;
    • Master file documentation for qualifying enterprises;
    • Declaration regarding the EU-sanction list; and
    • Exchange of Tax Rulings form.


    If you require support or just would like to know more details in respect of the new Decree, please do not hesitate to contact us.

    Richard Slimmen
    Managing Director

    Maikel Verhoeven
    Senior Manager

    Juliette Rutten


    [1] “Besluit van 19 juni 2019, nr. 2019/13003”