On November 21, 2025 on the website of the Dutch Courts (www.rechtspraak.nl) three similar opinions of the Dutch Advocate General Wattel. All three cases concern the qualification of a Brazilian juros sobre o capital proprio (Hereinafter: JCP) for the financial years 2018 through 2020 under the Dutch-Brazilian DTA. In the English Language a JCP is referred to as “Interest on Net Equity” (Hereinafter: IoNE) or as an “Allowance for corporate equity”. One of the most interesting issues discussed in the conclusions of the Advocate General regards the legal status of the outcome of a Mutual Agreement Procedure (Hereinafter: MAP).
The aforementioned conclusions of the Advocate General concern three cases in which the Dutch State Secretary lodged an appeal in cassation against three judgments of the Court of Appeal of The Hague. In these cases the Court of Appeal of the Hague ruled that the IoNE distributions qualify as income from shares as referred to in Article 10, Paragraph 3 of the DTA, and therefore constitute dividends for DTA purposes. Pursuant to Article 23, Paragraph 4, under a of the DTA the taxpayer is thus entitled to a tax sparing credit of 25%, and in connection therewith, to an amount (of €769,391 (2019) and €477,558 (2020)), respectively of withholding tax to be credited.
Already on June 3, 2025 we published an article on the 3 judgments of the Court of Appeal of The Hague against which bthe Dutch Secretary of State lodged an appeal in cassation. Our article of June 3, 2025 can be found here.
To put an immediate end to the suspense of our readers: in his opinion, the Advocate General advises the Supreme Court to declare the State Secretary’s appeal in cassation unfounded. However, as stated above: the most interesting part of the conclusions are in our view the considerations of the Advocate General on the legal status of the outcome of a MAP.
It should be noted that on July 30, 2025 the Court of Appeal of Amsterdam ruled in a similar case. Our Article on that judgment by the Court of appeal of Amsterdam can be found here.
The considerations of the Advocate General on the legal status of the outcome of a MAP
In an annex to its 3 conclusions the Advocate General states a.o. the following:
“With regard to the 2022 MAP decision, all courts of fact agree that it constitutes posterior commentary and can therefore only be relevant to the interpretation of the Netherlands–Brazil Treaty from that point onward.
Variant 1: Ambiguity not to the detriment of the taxpayer
- District Court of Zeeland-West Brabant
- Court of Appeal of ’s-Hertogenbosch
- District Court of The Hague
Variant 2: Entitlement to the most far-reaching method of relief
- District Court of North Holland
Variant 3: IoNE is not interest
- Court of Appeal of The Hague
The courts of fact all agree that a tax sparing credit of 25% must be granted. The path to that conclusion is not always the same. In particular, the Court of Appeal of The Hague which ruled an that IoNE is not interest for treaty purposes, and therefore there is no issue of overlap or ambiguity. The latter is particularly interesting because (…) it therewith also undermines the status of the MAP decision.”
Now back to the conclusions of the Advocate General. In his conclusions the Advocate General considers amongst others the following:
“According to the Secretary of State, the Court should have regarded the MAP as a subsequently concluded agreement between the treaty parties regarding the interpretation of Articles 10 and 11 of the DTA, and should therefore have taken it into account pursuant to Article 31, Paragraph 3, under a of the Vienna Convention on the Law of Treaties (Hereinafter: the Vienna Convention). The Court should also have considered the MAP as part of the treaty context, with the consequence that the qualification of the MAP (interest) should be followed.
This complaint seems unfounded to me. In my view, the MAP is neither an agreement between the treaty parties nor part of the treaty context, but rather a view posterior both to the treaty and to the allocation, of two executive authorities. In my view, a MAP such as the one in dispute does not fall under the interpretative tools of Article 31, Paragraph 3 of the Vienna Convention, as that provision refers only to any subsequent agreement ‘between the parties’. The tax authorities are not treaty party(-ies), but implementers. Therefore, there is no question of an agreement between the parties. Furthermore, from Article 31, Paragraph 3 of the Vienna Convention it follows that the interpretative means listed there must be used ‘together with the context,’ which implies that those interpretative means themselves do not constitute ‘context’. Even if a MAP such as the one in dispute were to fall under Article 32 of the Vienna Convention (supplementary means of interpretation) — which, in my view, is also not the case, given the enumeration of those means in that provision — it would still not constitute ‘context,’ since those supplementary interpretative means may only be used to confirm what already follows from treaty interpretation under Article 31, or if that interpretation leads to an ambiguous or obscure result (which is not the case) or to a result that is manifestly absurd or unreasonable (which is also not the case).
The Court’s judgment is also consistent with your case law. From HR BNB 2000/16 (see section 6.1 in the annex) and HR BNB 2017/91 (see section 6.3 in the annex) it follows that an interpretative MAP cannot prescribe to the court, to the detriment of the taxpayer, how a provision of a tax treaty should be interpreted. The Court itself interprets the treaty. From HR BNB 2023/33 (see section 5.7 in the annex) it follows that treaty-posterior OECD Commentary can only ‘confirm or clarify’ a particular interpretation; beyond that, it has no significance, also not as supplementary means of interpretation. Establishing or modifying the content of treaty obligations is not possible via an interpretative MAP, because otherwise such establishment or modification would be removed from democratic oversight (see sections 5.9 and 6.2–6.5 of the annex). An interpretative MAP does not go through the constitutional process of parliamentary consideration and approval, nor is it published in the Treaty Gazette (otherwise, see sections 6.2 and 6.6–6.7 in the annex).
The MAP in dispute was only concluded after the year under dispute; in my view, retroactive force would also be in violation with the general principle of legal certainty (see section 6.9 of the annex).
As has been shown, I do not see, in terms of treaty interpretation, any ‘difficulty or point of doubt’ as meant in Article 25, Paragraph 3 of the DTA. In my view, it is clear that IoNE constitutes a (primary) dividend, even if it is deductible. The Court ruled accordingly: IoNE is not interest. Even if IoNE qualifies as both dividend and interest, the Netherlands must credit 25%. In my view the MAP is primarily based, on the otherwise respectable wish of, in particular, the Dutch competent authority to make the linking rule of Article 13, Paragraph 17 of the Dutch Corporate Income Tax Act (which is based on Article 4, Paragraph 1, under a of the EU Parent-Subsidiary Directive) as effective as possible. Also in relation to third countries. From the OECD Commentary on Article 25(3) of the 1977 OECD Model Convention it can also be concluded that this provision is not intended to eliminate mismatches, but to resolve difficulties that (see section 3.19 of the annex):
“could impair or impede the normal operation of the clauses of the convention as they were conceived by the negotiators, the solution of which does not depend on a prior agreement as to the interpretation of the convention”.
I also doubt the conclusion that the State Secretary draws from the assertion that an interpretative MAP forms part of the treaty context. Even if that assertion were correct, it does not imply that the court must follow the MAP. The treaty context is, after all, primarily the text of the DTA itself (see Article 31, Paragraph 2, first sentence of the Vienna Convention), and the terms of a DTA must be interpreted in light of the object and purpose of the DTA (Article 31, Paragraph 1 of the Vienna Convention). If the interpretative MAP states that a dog should be treated as a cat, while the treaty text itself states that a dog should be treated as a dog, in my view the treaty text prevails, unless the MAP can also constitutionally be regarded in both treaty states as an amending protocol. That is not the case in the underlying.
I am of the opinion that plea (iv) also fails.”
And now for one more time back to the annex to the 2 conclusions. Which the Advocate General concludes by stating the following:
“Posterior commentary, which in my view includes a MAP decision, can serve as a supplementary means of interpretation, but according to the Dutch Supreme Court cannot justify an interpretation of a treaty provision that deviates from the ordinary meaning of the treaty terms in their context and in light of the object and purpose of the treaty. Such a deviation seems, in any case according to the Court of Appeal of The Hague, to occur here, since the Court concluded that IoNE does not qualify as interest and that therefore no ambiguity exists. The ‘clarification’ resulting from the MAP decision is, in my view, therefore inconsistent with the interpretation to be derived from the primary source, namely the Dutch Brazilian DTA, and is thus also not applicable to the years after 2022. The term ‘clarification’ is problematic in any case. We will never know what the treaty parties would have decided at the time if the ‘clarification’ had been explicitly discussed. In my opinion, the MAP decision is not a clarification and also has no effect for years after 2022.
The solution for future years is, by the way, straightforward: the DTA currently under negotiation should include an explicit provision or clarification resulting in the qualification of IoNE as interest. However, these negotiations may take some time, so it might be a better idea to come to an agreement on a protocol. This protocol must then go through the regular ratification process (…). Since, according to the MAP decision, the executive authorities of both countries apparently already agree on the qualification, it should be possible to fairly quickly achieve this. Presumably soon the Dutch Supreme Court will rule on the matter, after which — unless, redundantly, also a ruling is issued on the effect of the MAP decision for the years 2022 onwards — I expect that many more judgments from courts of fact will follow.”
The respective conclusions of the Dutch Advocate General as published on the website of the Dutch courts can be found via the following links (available in the Dutch language only):
The annex (ECLI:NL:PHR:2025:1284) of the Advocate General to the aforementioned 3 conclusions can be found here (also only available in the Dutch language).
It will be interesting to monitor how the Dutch Supreme Court will rule in the underlying cases.
Copyright – internationaltaxplaza.info
Follow International Tax Plaza on Twitter (@IntTaxPlaza)