Tax Update: Dutch government announces changes to its international ruling regime

Global Publication November 2018

On November 22, 2018, the Dutch Secretary of Finance sent a letter to parliament laying out his proposal for a new Dutch international tax ruling regime. The current regime was last overhauled in 2004 with the introduction of Advance Pricing Agreements (APA) and Advance Tax Rulings (ATR), both being handled by a centralized unit of the Dutch tax authorities based in Rotterdam. The reform is based on input from independent experts and following from an internet consultation round launched in July of this year. The goal of the currently announced changes is to “secure the quality and to increase its robustness of the ruling practice for businesses with real economic activities”. Changes to the ruling regime will be proposed dealing with (A) transparency of the rulings, (B) internal process for issuing rulings and (C) the content of the rulings.


Under the OECD BEPS project, transparency has been a key issue in the OECD’s efforts to combat aggressive tax planning and tax evasion, with the exchange of information on tax rulings being one of the key deliverables. The same push for transparency can also be found in the efforts of the European Union and its state aid procedures. Although not mentioned in the letter, the current efforts of the Dutch government seem to be partially related to these processes. The government proposes three changes to the ruling regime to increase transparency:

  • The Dutch tax authorities will publish an anonymised summary of each issued international tax ruling: In 2017, the tax authorities published a note summarising some of the most commonly issued APAs and ATRs. It is now proposed to continue this but then for each issued international tax ruling. The government is mirroring the same system that is already in place in Belgium./li>
  • The Dutch tax authorities will publish an annual report about all international tax rulings: One of the recommendations of the independent experts was to provide more transparency on the policies for issuing APAs and ATRs. A first report on the ruling practice for the year 2017 was published on February 18, 2018. The government will continue issuing these reports that will describe the relevant policies and practices for all international tax rulings (i.e. this report is not limited to APAs and ATRs).
  • A team of independent experts will periodically review the international tax ruling practice: The government is looking to get more valuable insight in the ruling practice and the quality of the issued rulings. It wants to obtain this by having independent experts periodically review the practice.


  • The Dutch tax authorities will work in a more centralised manner when they issue international tax rulings: International tax rulings need to comply with European guidance and the government feels the quality of the ruling practice can only be secured if there is a more centralised approach. The proposal is that any international ruling will require two signatures from members of a new unit: the International Fiscal Security Council (Colllege Internationale Fiscale Zekerheid). The submission of ruling requests, however, will not (yet) be centralised or changed: Such requests can still be sent to the local tax inspector and, only in cases mentioned in the relevant APA/ATR decrees, to the APA/ATR team.


The changes to the ruling practice are amongst others driven by the government’s desire to combat aggressive tax planning and tax evasion. One of the key concerns is the creation of letter box companies that are primarily established in the Netherlands for tax reasons. In light of this, the government proposes the following changes to the ruling practice:

  • Only tax payers meeting strict substance requirements, i.e. with relevant economic nexus in the Netherlands, will be able to request an international tax ruling: The letter specifies relevant economic nexus as “economical operational activities that are actually carried out for the risk and reward of the company in the Netherlands”. These economic activities should also fit the function of the company within the wider group. The company should have sufficient personnel in the Netherlands compared to the overall personnel of the group involved with these activities. In addition, the level of operational expenses should fit the relevant activities. An annex to this letter contains three examples for determining the economic nexus. Going forward, further examples will be published.
  • The Dutch tax authorities will focus more on the purpose of the specific structure and no ruling will be issued in cases where the aim of the structure is to save Dutch or foreign taxes: Currently, the Dutch tax authorities only test whether the purpose of the structure is to save Dutch taxes and no ruling is issued for structure where that it considered to be the case. The ambition of the government is to expand its review. Saving foreign taxes will also lead to no rulings being issued. The same applies if a ruling request involves transactions with entities that reside in countries that are on the EU list of non-cooperative jurisdictions.
  • International tax rulings will have a maximum term of five years (and ten years in very exceptional cases) and the rulings will be issued on the basis of a fixed template: There is apparently no fixed term or maximum term for international tax rulings. As such, a standard five year term is introduced. The ten year term is only applied in exceptional cases (including certain long-term contracts), but in those cases there will be new intermediate testing moment. Finnaly, the format for the rulings will be fixed and both the Dutch tax authorities and the tax payer will be explicitly bound to the conditions of the ruling going forward.

Next steps

The changes will be explained and included into policy documents in the course of next year. These policy documents (including more examples on economic nexus) will be made public and broadly displayed so that the new ruling policies will be easily accessible and clear for everybody. The aim is to have the new ruling policy enter into force on July 1, 2019.

Closing remarks

We recommend reviewing ruling requests in light of these changes, as additional requirements may need to be complied with when tax payers are (i) requesting extensions of existing rulings but also (ii) discussing new or even pending ruling requests. We are obviously more than happy to assist you in reviewing and advising you on your existing, pending and new structures and requests.

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