The Netherlands updated its guidelines on advance tax rulings, advance pricing agreements and substance requirements
  • Main
  • Analytics & Practice
  • News
  • The Netherlands updated its guidelines on advance tax rulings, advance pricing agreements and substance requirements

The Netherlands updated its guidelines on advance tax rulings, advance pricing agreements and substance requirements

The Netherlands updated its guidelines on advance tax rulings (ATRs), advance pricing agreements (APAs) and substance requirements.

 

New five decrees, published on June 12 and became effective the day after, are described as a consolidation of the existing practice of an APA or ATR process. Details of the decrees are summarized below.

 

APAs

The Updated Decrees provide that Dutch based companies whose activities in a year consist for 70% or more of receiving and on-paying interest, royalties, rent or lease amounts from and to group companies based outside the Netherlands (Service Companies) which seek an APA for these activities need

  • to meet the minimum substance requirements, as further explained below and
  • to run real risks in connection with these activities.

 

There are no substantial changes to the requirements for concluding an APA and the content of an APA. APAs may now apply for a longer term (5 years).

 

Pursuant to the Updated Decrees, the Netherlands intends to spontaneously exchange information with the relevant foreign tax authorities on any APA requested for after 13 June 2014 involving Service Companies, where the related corporate group does not have any other activities in the Netherlands or any genuine plans to engage in such activities.

 

ATRs

Intermediate holding companies and top holding companies in international structures that seek an ATR in relation to topics like the Dutch participation exemption, non-resident taxation, hybrid loans and the Dutch dividend withholding tax position for cooperatives, need to

  • either meet the minimum substance requirements or
  • be part of a group which has operational activities in the Netherlands or has genuine plans to engage in these.

 

Minimum substance requirements

The minimum substance requirements for ATRs and APAs as set out in the Updated Decrees are in line with the requirements of the Old Decrees and with the substance requirements that were codified as per 1 January 2014. The substance requirements have been codified for Service Companies without an APA that wish to apply the Dutch treaty network or the EU Interest & Royalty Directive (including national rules for implementation of this Directive). If such Service Companies do not meet the minimum substance requirements, the Netherlands intends to spontaneously exchange information with the relevant foreign tax authorities.

 

The Dutch minimum substance requirements hold summarized the following:

  • At least half of the total number of statutory board members and board members with power of decision resides or is actually established in the Netherlands.
  • Board members residing or established in the Netherlands have the required professional knowledge to properly perform their duties.
  • The company employs qualified staff.
  • The management decisions are taken in the Netherlands.
  • The main bank accounts of the company are held in the Netherlands. Though it is not required that the account is kept with a Dutch bank.
  • The bookkeeping of the company is conducted in the Netherlands.
  • The business address of the company is in the Netherlands.
  • The company is not considered a resident for tax purposes in another country than the Netherlands.
  • The company has at least an equity amount appropriate with regard to the required real risk.

 

© 1997—2014 DS Express, Inc

84, Spyrou Kyprianou, 

2nd floor, Limassol 4004

Cyprus

tel +357 25 731-042

info@dsexpress.com

 

11 Solzhenitsyna Street

Moscow 109004 Russia

tel +7 495 956-1727

fax +7 495 234-0735

info@dsexpress.com

15 Kreshchatik Street, office 149

Kyiv 01001 Ukraine

tel +38 044 237-2222

fax +38 044 278-6714

kiev@dsexpress.com

 

52 Angliyskaya Emb., office 28

St.Petersburg 190000 Russia

tel +7 812 570-1564

fax +7 812 325-723

spb@dsexpress.com

More contact details and office maps can be found in the section Contacts

© 2015 DS Express Ltd  All rights reserved