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The Netherlands and Luxembourg File MLI Ratifications with OECD

Netherlands & Luxembourg Get Ready to Implement MLI

The MLI will generally enter into force for some of their treaty partners this summer

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The Netherlands and Luxembourg have both filed their ratification instruments for the multilateral instrument (MLI) with the OECD, which will effectively modify many of the two countries' existing bilateral tax treaties. The MLI is intended to be read alongside existing treaties to implement measures preventing base erosion and profit shifting by multinational enterprises. So far, 87 countries have signed onto the MLI, 25 of which have ratified and filed their MLI ratification instruments with the OECD, including the UK, Japan, France, Ireland and Australia.

Luxembourg
Luxembourg deposited its notice of ratification of the MLI with the OECD on April 9, 2019. As a result, the MLI will generally enter into force for Luxembourg and certain treaty partners on August 1, 2019, where Luxembourg's treaty partner had already deposited its instrument of ratification and both countries agreed for the MLI to apply to their tax treaty. In this case, the MLI will apply for withholding tax purposes beginning January 1, 2020. For all other taxes, the MLI will apply to taxable periods beginning on or after February 1, 2020.

Netherlands
The Netherlands deposited its notice of ratification of the MLI with the OECD on March 29, 2019. As a result, the MLI will generally enter into force for the Netherlands and certain treaty partners on July 1, 2019, where the Netherlands' treaty partner had already deposited their instrument of ratification and both countries agreed for the MLI to apply to their tax treaty. In this case, the MLI will then apply for withholding tax purposes beginning January 1, 2020. For all other taxes, the MLI will apply to taxable periods beginning on or after January 1, 2020.

Update on Canada's MLI
Canada's MLI implementation bill (Bill C-82) is at third reading in the House of Commons, but must pass through several more steps before ratification-including senate approval and Royal Assent. After it receives Royal Assent, the Governor in Council will authorize the ratification of the MLI and Canada can then deposit the notice of ratification with the OECD (which will serve as a starting point for various effective dates).

If Canada deposits its notice of ratification with the OECD on or before September 30, 2019, the MLI will begin to apply to some Canadian tax treaties for withholding tax purposes on January 1, 2020.

For more information, contact your KPMG adviser.

Information is current to April 30, 2019. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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