Proposed new policy Dutch ruling practice - What's new? Schedule a call

    What’s your question?


    What’s your name?


    What’s your company name?


    How can we reach you?


    Proposed new policy Dutch ruling practice – What’s new?

    On 23 April 2019, the new proposed Decree on international tax rulings (including Advance Pricing Agreements and Advance Tax Rulings) was published by the Dutch Secretary of State for Finance. It is intended that the new Decree will be implemented as of 1 July 2019, impacting all rulings requested and signed after that date. Tax rulings that have been signed before that date will remain in place until their expiration date and will not be subject to the proposed changes.

    Further to our earlier published reactions on the renewed ruling practice, we will in this alert briefly address the proposed changes compared to the current ruling practice. The proposed changes focus on three areas:

    • Conditions to conclude tax rulings;
    • Transparency and
    • Process.

    Conditions to conclude tax rulings

    The Secretary of State for Finance has proposed additional conditions for concluding tax rulings. These conditions intend to ensure that tax rulings are only provided to entities that have sufficient economic nexus in the Netherlands, have sufficient substance and are not engaged in tax avoidance practices.

    The following additional conditions are proposed:

    • A tax ruling can only be concluded if:
      • the ruling requesting entity is part of an internationally operating group that is operationally active in the Netherlands (economic nexus); and
      • an operating business activity is performed by or for risk and account of the ruling requesting entity by a sufficient number of employees in the Netherlands.
    • A tax ruling will 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 jurisdictions that are included in the Dutch list of low tax jurisdictions.


    Compared to the current conditions for concluding tax rulings, the proposed economic nexus approach is an open criterion. Although the Secretary of State for Finance will publish practical examples of the application of the economic nexus approach, different views may arise on whether there is sufficient economic nexus or not. Such an open criterion does not contribute to the objectivity of the ruling practice.

    Furthermore, in the new ruling practice no tax rulings will be concluded for transactions involving entities located in low tax jurisdictions, regardless of the actual activities performed by the low taxed entity. Valid business activities performed by entities located in low tax jurisdictions should, in our view, not be disqualified because of the location.

    Within the renewed ruling practice, anonymised summaries of international tax rulings will be made publicly available. This also applies to ruling requests that have not resulted in a concluded tax ruling.

    The Secretary of State for Finance explicitly states that summaries will be anonymized in such a manner that it cannot be traced back to specific taxpayers. In our view, the Tax Authorities will also have to ensure that it will not be possible to indirectly trace back a decision to a specific taxpayer.

    In order to improve consistency between policy and its application, centralized coordination will be implemented for tax rulings by introducing a committee (“College Internationale Fiscale Zekerheid”) that will sign on the tax rulings. Each tax ruling will as such need final approval of the committee. Although this may increase the consistency between policy and its application, we wonder the impact on the processing time of tax ruling requests.

    Lastly, we note that tax rulings under the renewed ruling practice will be concluded for a period of maximum 5 years. Only in exceptional cases, tax rulings can be concluded for a period of 10 years.

    If you have any questions about the new ruling practice or need assistance with your ruling under the current or future requirements, please do not hesitate to contact us.

    Rudolf Sinx
    Managing Director

    Stefan Ubachs
    Senior Manager

    Nard Donders