Netherlands publishes first summaries of private tax rulings issued to MNE groups

December 5, 2019 Europe, Featured News, The Netherlands, Transfer Pricing
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By Jian-Cheng Ku & Tim Mulder, DLA Piper Nederland N.V.,  Amsterdam

The Netherlands, on October 16, published the first redacted summaries of private tax rulings that have been issued to taxpayers or rejected by the Dutch tax authorities.

These rulings were published pursuant to a July 1 update to the Netherlands’ international tax ruling practice which aims to make tax rulings more transparent. Hence, it will be clearer to everyone what kind of rulings the tax authority has concluded with multinational enterprises.

The summaries are helpful because they provide insight into the Netherlands ‘ updated tax ruling practice including the situations where it is still possible to obtain a ruling. It is nearly impossible to determine the identity of the requesting company in the redacted tax rulings.  

A summary of 10+ advance pricing agreements and 50+ advance tax rulings has been published. The topics vary from confirmation of the arm’s length remuneration in intercompany financing transactions or support services to the application of the full Dutch participation exemption and domestic dividend withholding tax exemption.

In some situations, no ruling was granted because the Dutch taxpayer had withdrawn its request. Reasons for withdrawal included the taxpayer’s desire to avoid additional administrative burdens and the taxpayer’s inability to meet the minimum economic nexus condition.

In some situations, Dutch tax authorities rejected the ruling because the request related to a direct transaction with a related party residing in a low-tax jurisdiction. Under the updated tax ruling practice guidelines, a ruling request will be denied if it involves a direct transaction with a related party residing in a jurisdiction that is blacklisted for Dutch tax purposes.

The redacted summary of ruling requests includes the type of the activities of the multinational group is involved with (e.g. global production and sales activities), the responsibilities of the Dutch taxpayer (e.g. operational activities in Europe and intercompany financing), and the purpose of the ruling request (e.g. remuneration for the intercompany financing activities).

In addition, the summary includes references to the legal framework, e.g. the Dutch transfer pricing articles and decrees.

The number of rulings published evidence that the Netherlands still has an attractive investment climate. In particular, the Netherlands is often used as an investment platform for private equity funds which set up Dutch cooperative structures and hire local managers to manage their investments.

Jian-Cheng Ku

Jian-Cheng Ku

Partner at DLA Piper Nederland N.V.

Jian-Cheng Ku advises on international tax law and transfer pricing with a particular focus on international tax planning, M&A and private equity transactions, corporate reorganisations, and planning and design of transfer pricing policies.

Jian-Cheng Ku

Jian-Cheng Ku
Partner


T +31205419911
F +31 20 541 9999
M +31613384683
E [email protected]

DLA Piper Nederland N.V.
Amstelveenseweg 638
1081 JJ Amsterdam
P.O. Box 75258
1070 AG Amsterdam
The Netherlands

Tim Mulder

Tim Mulder

Associate Tax Adviser at DLA Piper Nederland N.V.
Tim Mulder advises on Dutch and international tax aspects relating to international tax planning, M&A transactions, corporate restructurings, private equity and investment fund transactions.

Tim Mulder

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