Foreign Account Tax Compliance Act (FATCA) intergovernmental agreement (IGA) with the United States (US)
The Netherlands signed an FATCA IGA with the United States in 2013. Ever since, Dutch 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. 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 supports 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. 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 nearly all of its bilateral tax treaties within the scope of the MLI.
EU state aid
The EC has been investigating for several years whether certain schemes/regimes, as well as individual tax rulings, between companies and local authorities are in breach of EU state aid rules. In some of these cases, the EC has already issued final decisions concluding that these schemes and tax rulings constitute unlawful state aid. One of these final state aid decisions concerns a Dutch tax ruling. The Dutch government has appealed this decision with the General Court (i.e. the court of first instance within the European Union). In its judgement, the General Court annulled the decision of the EC because, in the Court’s view, the EC did not demonstrate the existence of an economic advantage within the meaning of EU state aid rules.
The Dutch government has 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 as the goal of Dutch tax rulings is to obtain certainty in advance.
Mandatory disclosure (DAC6)
DAC6 requires tax advisers, intermediaries, and, in some cases, taxpayers to exchange information with the tax authorities on certain structures. The aim is to counter aggressive tax planning, although non-aggressive structures may be impacted as well, as long as there is some connection to the European Union. On 1 January 2021, the 30-day period for the reporting of new cross-border arrangements under the DAC6 regime started. This means that, as of 1 January 2021, so-called cross-border tax arrangements become reportable within 30 days after the arrangement is made available or ready for implementation or the first step of implementation has been made.
Read more on Dutch DAC6 implementation here.