On 12 February 2019, the Lower House (Tweede Kamer) of Dutch Parliament approved the Multilateral Instrument (“MLI”) ratification bill. As part of the approval, the Lower House instructed the Dutch government to opt out of the “anti-commissionaire provision” (article 12 of the MLI) until at least year-end 2020. The ratification bill is yet to be approved by the Upper House (Eerste Kamer). In all other respects, the approved bill confirms the provisional list of choices and reservations notified by the Netherlands to the OECD in June 2017.


On 12 February 2019, the Lower House of Dutch Parliament approved the bill of the MLI that was submitted to Dutch parliament on 20 December 2017 (see our Tax Flash). The bill now approved follows the provisional list of choices and reservations notified by the Netherlands to the OECD in June 2017 (see our Tax Flash), apart from one amendment which entails changing the provisional choice of the Netherlands for art. 12 MLI by making a full reservation (opt-out). Art. 12 MLI targets the artificial avoidance of the permanent establishment ("PE") status through inter alia commissionaire arrangements by broadening the “agency PE” definition in existing bilateral tax treaties. According to the amendment, before the Netherlands can opt into art. 12 MLI, the Dutch government has to ensure that there is either sufficient clarity on profit allocation to agency PEs or that there is an effective dispute resolution mechanism in place with sufficient other MLI parties. If adequate progress is made, a legislative proposal to withdraw the Dutch reservation may be submitted by the end of 2020. Under the applicable entry into effect rules of the MLI, a withdrawal of the Dutch reservation, meaning an opting into art. 12 of the MLI, will then generally be effective at the earliest for tax book years beginning on or after 1 January 2022.

The approval by the Dutch Lower House brings the MLI proposal one step closer to the conclusion of the domestic ratification procedure. The next step is the approval by the Upper House (Eerste Kamer). The Dutch government intends to complete the MLI ratification procedure in the first quarter of 2019, aiming for general entry into effect of the MLI at the earliest as from 1 January 2020 (depending on the ratifications by the Dutch treaty partners). In order for the MLI to be effective as of 1 January 2020 for corporate income tax, ratification by the Netherlands should be concluded before 1 April 2019. As regards withholding taxes, the ratification should take place before 1 October 2019.

At this moment 20 jurisdictions have completed their MLI ratification procedure. Currently, the Netherlands listed 82 out of its 94 tax treaties to be brought under the scope of the MLI. Based on the (provisional) choices of its treaty partners, the Netherlands expects 51 of its tax treaties to be affected by the MLI.