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Netherlands: Plans for revised, renewed international tax rulings policy

Netherlands: Revised international tax rulings policy

The Ministry of Finance, in a 23 April 2019 letter to the Lower House, announced plans to revise and renew the policy for issuing tax rulings of an “international nature.” Under this revised policy, there would be stricter requirements for international tax rulings. The revised practice would be effective 1 July 2019.


Related content

A version of a revised international tax ruling practice was previously announced in November 2018. Read TaxNewsFlash

The purpose of the revision would be to provide a more transparent ruling practice and to enhance the quality of tax rulings for taxpayers with “real activities.” The proposed adjustments to the ruling practice would relate to the content, transparency, and process for all international tax rulings.

The new international tax ruling policy would be intended to provide certainty for taxpayers, and would apply to tax rulings that relate to the application of corporation tax and dividend tax and to the application of income tax treaty measures—for instance, this revised practice would apply to advance pricing agreements (APAs) as well as rulings concerning participation exemptions, the innovation box regime, and the tonnage tax regime, and to rulings concerning whether there is a permanent establishment and to agreements on the allocation of assets and profits to a permanent establishment.

The revised tax rulings policy would also describe situations when the tax authorities would not conduct preliminary consultations (so that no ruling could be issued) such as situations when:

  • The taxpayer applicant has insufficient economic nexus in the Netherlands.
  • Tax saving (whether Dutch tax or foreign tax) is the sole or primary reason for the subject transaction.
  • A party to the transaction is established in a country that is on the Dutch list of low-tax and non-cooperative countries.

An annex to the 23 April 2019 letter provides a number of examples to illustrate these non-ruling factors.

Economic nexus

An important measure in the revised tax ruling policy would be the tightening of the “substance requirements.” The current list of substance requirements would be replaced by a criterion for “economic nexus” in the Netherlands. This would mean that certain operational activities would need to be conducted in the Netherlands, with sufficient personnel and staff being available at the taxpayer group level in the Netherlands.

APAs, tax rulings process

To implement the new tax rulings policy, a new body—the International Fiscal Security College (College Internationale Fiscale Zekerheid) or IFZ College—would be formed and would be responsible for coordinating preliminary consultations with taxpayers seeking international tax rulings. The IFZ College would be responsible, among other things, for maintaining the unity and implementation of the revised tax rulings policy.

In principle, the tax inspector would still be a key person involved in the preliminary consultation, but for certain subject matters or tax topics, the IFZ College team would join in the preliminary consultation with the tax inspector. The IFZ College would serve as a second level of review and approval in all tax rulings.

Requests for bilateral or multilateral APAs would be addressed directly to the International Tax Department (Internationale Zaken en Verbruiksbelastingen (IZV)) of the Ministry of Finance. The IFZ College team would be involved in an advisory role in applications for bilateral APAs.

The revised policy would also provide a process for addressing tax rulings when there is a “potential foreign investor” (that is, an investor that is considering making a first-time substantial physical investment in the Netherlands and that meets certain other conditions).


The aim for greater transparency with respect to international tax rulings would be satisfied with the publication of a summary of all rulings granted (taxpayers would remain anonymous in this summary). An annex to the 23 April 2019 letter to the Lower House sets out how such summaries could be provided.

Also, anonymous summaries of situations when preliminary consultations failed to result in a tax ruling, including an explanation of why the ruling was not granted, would be published.

KPMG observation

As set forth in the letter to the Lower House, the proposals for revised international tax rulings indicate that taxpayers that are established in the Netherlands solely for tax reasons and that have no further economic nexus in the Netherlands would no longer be granted a tax ruling from the tax authorities. Similarly, tax rulings would not be granted in situations when the application relates to direct transactions with entities established in a low-tax or non-cooperative country. Other initial observations about the revised tax rulings policy are:

  • The concept of “economic nexus” could be expected to result in a higher threshold for tax rulings than under the current substance requirements required for obtaining certainty in advance of taxpayers entering into certain transactions.
  • Still, the ban on providing tax rulings for certain structures or transactions does not mean that these structures or transactions would simply disappear. 
  • The revised policy for tax rulings would not, in principle, affect existing rulings or rulings agreed to before 1 July 2019 (assuming that there is no change to the effective date of the new tax rulings policy).

Under the revised tax rulings policy, it would be expected that the number of bilateral APA requests would increase given that bilateral APAs currently are an international trend for addressing double taxation.

Finally, the revised tax ruling practice is expected to be discussed in the Lower House, and at present it is on the agenda for discussion on 4 June 2019. Whether this discussion would result in any adjustments to the proposed tax rulings policy is uncertain.

Read an April 2019 report (English) or an April 2019 report (Dutch) prepared by the KPMG member firm in the Netherlands

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