In a letter sent to the Dutch Parliament on July 6, 2023 the Dutch Secretary of State for Finances informed the House of Commons that he intends to make the following (minor) adjustments to the regulations applying to rulings with an international character. In his letter to the House of Commons he states that he intends to have the Decree amending the existing Decree to be published in the beginning of October 2023. Publication in the Dutch State Gazette is necessary for the intended adjustments to enter into force.

Certainty in advance in case of a complete dismantling of the structure

In order to remove problems regarding supervision in the event of a complete dismantling of a tax-avoiding structure, the Ruling Decree will be amended in such way that the possibility is created that under strict conditions also for the temporary (transition) period in which the dismantling of structure takes place certainty in advance can be provided. The Dutch tax authorities will provide certainty in advance in situations where a tax-avoiding structure is completely dismantled. The tax authorities will also provide certainty in advance in situations in which they wish to apply base-protective provisions whereby (Dutch and foreign) tax-avoiding elements are completely removed and there will no (longer) be a flow to affiliated entities in non-cooperative jurisdictions and/or low-tax jurisdictions.

The Dutch tax authorities will not provide any certainty in advance in situations in which the dismantling results in non-taxed or low-taxed proceeds elsewhere, against which depreciation potential arises in the Netherlands. The tax authorities will also not provide any certainty in advance in situations where after dismantling or application of the base-protective provisions there are still transactions in place with affiliated entities established in jurisdictions that are included in the Regulation on low-taxing states and non-cooperative jurisdictions for tax purposes.

Another condition that is to be met is that after the dismantling or application of the base-protective provisions, also a situation has to exist in which within the current existing framework certainty in advance could be provided.

Direct transaction with entities in non-cooperative jurisdictions and low-taxing states

The Dutch tax authorities will not issue rulings regarding the tax consequences of direct transactions with entities established in a state that is included in the Regulation on low-taxing states and non-cooperative jurisdictions for tax purposes.

Since from the perspective of the taxpayer the businesslike nature of transactions is naturally guaranteed in situations in which it enters into transactions with unrelated entities, it has been  included in the amending Decree that this condition does not apply if the requested certainty in advance relates to third-party transactions regarding the application of the innovation box and the application of the tonnage regime or on the tax consequences of third-party transactions when concluding an Advance Pricing Agreement (APA).

Supplementary provision to bilateral and multilateral agreements

A provision will be included in the ruling Decree to, where appropriate, include a critical assumption that transfer pricing adjustments from countries not involved in a bilateral or multilateral transfer pricing ruling can be taken into account in bilateral and multilateral APAs. This amendment provides policy support for mutual consultation procedures (MAPs).

Enclosed with his letter the Secretary of State sent a draft version of the Decree amending the Decree on preliminary consultation regarding rulings with an international character to the House of Commons. This draft version of the can be found here. (Available in the Dutch language only)

Remark ITP

It should be noted that the Dutch government fell on July 7, 2023 and that new elections will be held in the Netherlands. We do not know if and how the fact that the Dutch Government has fallen on July 7, 2023 might impact the official publication of the announced amending Decree.

Copyright – internationaltaxplaza.info

Follow International Tax Plaza on Twitter (@IntTaxPlaza)