Dutch government outlines new international tax ruling practice

On 18 February 2018, the Dutch Undersecretary of Finance had announced a review and reorganization of the Dutch international tax ruling practice. In a letter to Dutch parliament of last 22 November, the Undersecretary describes the outlines of the new Dutch international tax ruling practice, which he aims to adopt with effect from 1 July 2019.

When presenting his policy on international tax avoidance and tax evasion to Dutch parliament on 23 February 2018, the Undersecretary has made clear that providing advance certainty to taxpayers is and will remain one of the key elements in the Dutch Tax Authorities’ supervision. The measures now announced only aim to increase the quality of the rulings and make the ruling practice more robust.

The measures focus on international tax rulings. Although a definition is yet to be communicated, we expect it to include all tax rulings that would by nature be in scope of the EU Directive on automatic exchange of information on tax rulings.

The new measures are centred around three themes: transparency, issuing process and ruling content.


In order to address a perceived demand in society for more public information about international tax rulings, the Undersecretary intends to increase transparency by taking the following measures:

  • The Dutch Tax Authorities will publish an anonymous summary of each international tax ruling.
  • The Dutch Tax Authorities have this year published general overviews and comments in their an annual report on tax rulings issued and denied by their APA/ATR ruling team. APA’s (short for Advance Pricing Agreements) provide certainty in advance on international transfer pricing policies (including those of conduit companies), while ATR’s (short for Advance Tax Rulings) provide certainty in advance on the tax qualification and tax consequences of transactions in international structures. The Dutch Tax Authorities will continue their annual reporting on APA’s and ATR’s and extend it to all international tax rulings, not just those qualifying as APA’s or ATR’s and processed by the APA/ATR team.
  • The practice of submitting tax rulings to periodic quality review by independent experts will be continued and will be extended to all international tax rulings, not just those issued by the APA/ATR team.


As an effort to better ensure consistency in terms of transparency and content of tax rulings, the Undersecretary foresees an internal reorganization of the ruling practice of the Dutch Tax Authorities:

  • The co-ordination of the international tax ruling practice will be further centralized by introducing one body that will be involved in the sign-off of every international tax ruling, not just those issued by the APA/ATR team.


In his fight against international tax avoidance, the Dutch Undersecretary will take a number of measures that are aimed to deny certainty in advance to MNE’s with only limited presence in the Netherlands:

  • Instead of a list of minimum-substance requirements that taxpayers in general need to meet currently in order to qualify for concluding an ATR, or that conduit companies specifically need to meet currently in order to qualify for concluding an APA, all MNE’s will henceforth need to have sufficient ‘economic nexus’ with the Netherlands in order to qualify for concluding any international tax ruling. The concept of ‘economic nexus’ is yet to be defined but should indicate that the MNE performs operational business activities in the Netherlands, employing a number of relevant personnel and an amount of operational expenses in the Netherlands that are commensurate with the activities performed.As an example of insufficient economic nexus, the Undersecretary mentions an active operational distribution entity in the Netherlands also performing interest or royalty conduit activities without having the appropriate operational substance for such conduit activities. In such case the taxpayer is eligible to conclude a tax ruling on the distribution activities but not on the conduit activities.Another example of insufficient economic nexus entails a non-Dutch investment company setting-up a Dutch intermediate holding company which will not perform any active management services to the investment company’s sub-subsidiaries. Even though the Dutch intermediate holding company might based on Dutch case law be considered to actively hold the sub-subsidiaries and qualify for the Dutch participation exemption regime, the lack of economic nexus will disqualify this holding company for a tax ruling re-confirming for example application of the participation exemption regime.
  • The Dutch Tax Authorities will focus more on the motive behind the specific structure that is subject of a ruling request. If the overriding motive is a saving of Dutch or non-Dutch taxation, a ruling will be denied. As an example, the Undersecretary mentions interest-free loans on which a Dutch taxpayer seeks confirmation of an arm’s-length notional interest deduction while it is clear that no corresponding interest income is picked-up with the loan creditor’s country of residence.In this context the Undersecretary also announces that no tax rulings will be issued on transactions with entities residing in countries listed on the EU list of non-cooperative countries or in low-tax countries (e. by current Dutch standards countries applying a statutory tax rate of less than 9%).
  • As APA’s currently, all international tax rulings will henceforth be agreed for a maximum term of 5 years. In exceptional cases, g. when long-term contracts are involved, that term can be extended to a maximum of 10 years.
  • International tax rulings will be issued in fixed formats.

The above measures only limit the willingness of the Dutch Tax Authorities to conclude tax rulings. As the Undersecretary acknowledges in his letter, actual Dutch tax law does not change as a result of these measures. MNE’s might therefore still be willing to set-up international tax-saving structures through the Netherlands, albeit without certainty in advance from the Dutch Tax Authorities.

We will continue to inform you on any further developments on this topic before the Dutch Tax Authorities will adopt this new tax ruling policy with effect of 1 July 2019.

Should you require more information at this time, please do not hesitate to contact one of our advisers.

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