Foreign Account Tax Compliance Act (FATCA) intergovernmental agreement (IGA) with the United States (US)
The Netherlands signed an FATCA IGA with the United States on 18 December 2013. As of 1 July 2014, banks and insurers must be compliant with the FATCA provisions. This US-based legislation is implemented in Netherlands’ domestic law and applies to all financial institutions worldwide. The FATCA IGA is based on the standard Model 1A IGA of 4 November 2013 and provides for specific exemptions.
Common Reporting Standard (CRS)
The CRS is implemented in Netherland’s domestic law as of 1 January 2016. The same holds true for the amended EU Directive on Administrative Cooperation.
Based on this domestic law, financial service companies in the Netherlands must comply with certain administrative obligations and report information on foreign account holders to the Dutch tax authorities. This information may include account numbers and the balance on a bank account of foreign account holders.
Base erosion and profit shifting (BEPS)
According to the Netherlands, the BEPS issues should be addressed through international cooperation. As a member of the OECD, the Netherlands is an active participant in the BEPS project of the OECD and supporting its goals. As a consequence, the Netherlands will enact legislation when agreement is reached within the OECD on the BEPS project and all parties agreed to implement. One example of this type of legislation is the OECD CbC reporting implementation package that has been published in the OECD report on Action 13 in 2015. As of 1 January 2016, the Netherlands has implemented CbC reporting in domestic law in accordance with the system and methods as prescribed in the OECD CbC reporting package. Another example concerns the OECD recommendations on innovation box rules. As of 1 January 2017, the Dutch innovation box regime is aligned with the modified nexus approach as described in the OECD report on Action 5. The tax treaty related outcomes of the BEPS project are considered part of the Netherlands’ tax treaty policy.
The Netherlands has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (Multilateral Instrument or MLI) to implement the tax treaty related outcomes of BEPS. The Netherlands has brought 82 of its current 94 bilateral tax treaties within the scope of the MLI. Not included within the scope are the nine bilateral tax treaties that were under (re)negotiation at the time of the MLI signature and the three of the Netherlands’ bilateral tax treaties that were concluded but not yet in force during the signing.
EU state aid
The European Commission (EC) has been investigating for several years whether certain individual tax rulings between companies and local authorities are in breach of EU state aid rules. In some of these cases, the EU has already made final decisions concluding that these tax rulings are, in fact, unlawful state aid. One of these final state aid decisions concerns a specific, individual tax ruling issued by the Dutch tax authorities on the calculation of the taxable basis for CIT purposes and the compliance with the EU rules on state aid. The EC has concluded that this ruling does, in fact, constitute state aid. The Dutch government has appealed this decision with the ECJ.
It is expected that the EC may also investigate other tax rulings. However, the EC has explicitly stated that it does not expect to encounter systematic irregularities with Dutch tax rulings. The Dutch government has also taken the position that the Dutch tax ruling practice in general does not allow for state aid, considering that Dutch tax rulings do not deviate from Dutch tax law. The aim and purpose of Dutch tax rulings is to obtain certainty in advance.