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Netherlands will be putting into place stricter requirements for the issue of international tax rulings by the end of June 2019.
“Many people associate the issuing of rulings with shady practices. But a ruling gives companies nothing more or less than prior clarity about the method of taxation based on the law,” Dutch State Secretary for Finance, Menno Snel, said in his November 22 letter to the House of Representatives.
“We plan to make substantial changes to the law in the years to come to prevent the Netherlands from being used as a conduit to tax havens,” Snel wrote.
Snel said that the Government would “tighten up” the rules for issuing tax rulings and make the Dutch tax ruling regime more transparent.
Under the new regime, “letterbox” companies that establish in the Netherlands for tax reasons without any commercial substance would not receive a tax ruling.
No tax ruling would be issued where the sole motive is to save Dutch or foreign tax. This also applies to tax rulings for companies based in countries with a tax rate of less than nine percent or countries featuring on the European Union’s blacklist.
The tax authority would also publish an anonymized summary of each tax ruling and would also publish an annual report.
All international tax rulings that are applied for would now be forwarded to one central team before being issued. This is currently only the case for certain types of tax rulings.
Finally, all international tax rulings would have a maximum term of five years, to be extended to ten years in exceptional cases.
Snel had announced, in February 2018, that the Government is revising the Dutch tax ruling practice in light of results from a review conducted to examine if Dutch tax rulings met Dutch procedural requirements. Over 4,000 Dutch tax rulings were reviewed.
The Government is aiming to put these measures into effect starting July 1, 2019.