Dutch State Secretary publishes draft Decree on revised ruling policy

24/04/19

Yesterday afternoon, 23 April 2019, the Dutch State Secretary published a draft Decree in which he outlines his new policy for rulings with an international character (Advance Pricing Agreements (APA) and Advance Tax Rulings (ATR)). This draft Decree was published in preparation for a plenary meeting with Dutch Parliament. This meeting, however, has been postponed from today, 24 April 2019, to an as yet unknown date after the Spring break (i.e. after 13 May 2019). The State Secretary indicates that the measures ensure "a more transparent ruling practice" and also says that "the quality of ruling practice for companies with real economic substance is further safeguarded”.

Key points

The following elements are new. Apart from these, the draft Decree gives an overview of the ruling practice as it was already known:

There will be a new College within the Tax Authorities that will issue the rulings centrally. The Decree also indicates which department of the Tax Authorities is competent in which cases.

In certain situations, no more pre-consultation will be allowed for, namely when:

there is no sufficiently relevant economic nexus;
saving of Dutch or foreign tax is the sole or decisive reason for the transaction; or
a transaction takes place with a country that is on the Dutch list of low-tax jurisdictions.

Rulings are published in summarised and anonymous form. Situations in which pre-consultation has taken place but where the ruling has not been concluded, are also published in summarised form, including an explanation of why the ruling was not concluded.

In principle, the tax authorities will make an effort to conclude APAs bilaterally, provided that a tax treaty has been concluded with the other country and that country is willing to cooperate in this respect.

The Dutch State Secretary expects that the new ruling policy will take effect on 1 July 2019.

a transaction takes place with a country that is on the Dutch list of low-tax jurisdictions.

a transaction takes place with a country that is on the Dutch list of low-tax jurisdictions.

What does this mean for you?

Publication of summaries

If you wish to conclude a ruling with the Dutch Tax Authorities after 30 June 2019, you must bear in mind that the ruling will be published anonymously and in a summarised form, even if, ultimately, the ruling is not concluded. The Dutch State Secretary has attached a number of test summaries to his draft Decree. The summaries state: cause, facts, legal framework, considerations and conclusion. The summaries will be anonymised so that they cannot be traced back to individual taxpayers. It is not clear from the draft Decree where the summaries will be published.

Conditions for rulings with an international character

Furthermore, the Dutch Tax Authorities will only hold preliminary consultations if:

there is a sufficient, relevant economic nexus with the Netherlands;
saving tax is not the sole or decisive reason for the transaction; and

the transaction does not take place with a country that is on the Dutch list of low-tax jurisdictions.

When taxpayers make a request for a ruling, they must explain that the above conditions have been met. With the draft Decree a number of examples are given when a ruling is or is not issued.

Bilateral APAs

The Netherlands will endeavor to conclude APA requests bilaterally. The draft Decree does state that this cannot be imposed on taxpayers. So you can still choose for yourself whether or not to conclude a bilateral APA.

We understand that the current ruling practice will be maintained until 1 July 2019.