We would like to inform you about the (expected) renewed Dutch ruling practice. The new ruling practice is assumed to be introduced from the 1st of July onwards. Rulings signed before the introduction of the new practice will remain in place until their expiration date and will not be subject to the proposed changes. The changes compared to the current ruling practice will be discussed below
Due to political and public attention for the Dutch ruling practice, the State Secretary of Finance, Menno Snel, decided to renew the system. In a letter to the Dutch House of Representatives, the State Secretary outlined how the renewed ruling practice would take shape. The following three key elements were addressed:
The State Secretary notes that he is aware of the increased need for public information on international rulings. Therefore, the following measures will be taken for such rulings:
In order to accept rulings in a consistent way the following measure will be taken:
Although centralization of the ruling practice can contribute to the quality of the ruling process, we also expect that handling time will increase since more people will be involved in the decision to grant a ruling.
As the battle against tax avoidance remains a major issue for the Dutch government, rulings for MNE’s with limited substance in the Netherlands have been revisited. Measures regarding substance for international rulings, are as follows:
The economic nexus requirement is an open criterion. It requires that sufficient economic activities have to be performed in the Netherlands to obtain a Ruling. Furthermore, the operational costs should be in proportion to the economic activities performed in the Netherlands. The current substance list consists of clear and fixed requirements that have to be met. By introducing a new open requirement, views can however differ on whether there is sufficient economic nexus or not.