On 23 April 2019 the Dutch State Secretary of Finance has published a draft decree (the "Decree") and further guidance on the revised Dutch tax ruling practice for tax rulings with an international character ("international tax rulings"), expected to become effective as from 1 July 2019.

In his letter of 22 November 2018 (the "November Letter"), the Dutch State Secretary of Finance already announced and outlined on a high-level basis the revised Dutch tax ruling practice for international tax rulings (see also our Tax Alert of 27 November 2018). The Dutch State Secretary of Finance has now published the Decree and further guidance on this revised international tax ruling practice, which is largely in line with the November Letter. The guidance has been primarily provided in an annex to the Decree through certain illustrative examples (the "Examples"). After 1 July 2019, further guidance will also be provided by publishing anonymised summaries of cases that actually occur in practice.

We note that the revised practice in principle only applies to international tax rulings relating to Dutch corporate income tax, Dutch dividend withholding tax and the application of tax treaties.

Requirements to obtain an international tax ruling

Economic nexus

Under the revised Dutch ruling practice, an international tax ruling can only be obtained by companies that have sufficient 'economic nexus' with the Netherlands. This new economic nexus concept replaces the (minimum) Dutch substance requirements that currently need to be met in certain cases to obtain a tax ruling. Based on this new economic nexus concept (i) the group of which the Dutch company requesting the ruling is part, should perform economic operational activities in the Netherlands and (ii) economic operational activities should be performed by or for the account and risk of the company in the Netherlands, for which activities sufficient relevant personnel is available in the Netherlands (and which should be proportional to the total personnel of the group that is relevant for the activities carried out by the company in the Netherlands).

One of the Examples refers to a company performing operational activities in the Netherlands (a distribution centre), which company also receives and pays interest/royalties without having the corresponding operational functionality present. This company can obtain a ruling in respect of its operational distribution activities, but not for its intragroup interest/royalty activities because it has insufficient economic nexus in the Netherlands in relation to the latter activities.       

Tax avoidance

Under current policy, an international tax ruling is not granted if the transaction for which the ruling is requested has the sole or the decisive motive to avoid Dutch taxes. After the revision, an international tax ruling will also be denied if the sole or decisive motive of the structure is to avoid foreign taxes.

One of the Examples refers to a Dutch company that borrows interest free from a related foreign party to generate a tax benefit. Based on the Dutch so-called "informal capital doctrine", the Dutch company would like to impute and deduct an at arm's length interest, despite the fact that no interest is actually paid. Assuming there is no corresponding taxable interest income at the level of the related foreign party (i.e. a transfer pricing mismatch), no ruling will be granted in respect of this financing structure, because the sole or decisive motive would be deemed to be international tax avoidance.

Low-tax jurisdictions

Furthermore, international tax rulings will not be granted for transactions that involve companies that are tax resident in a state that is included on the Dutch list of so-called "low-tax jurisdictions" and the EU list of non-cooperative jurisdictions. A jurisdiction is considered "low taxed" if it levies no profit tax or a profit tax with a statutory rate of less than 9%. Prior to each calendar year, an exhaustive list will be published with all designated non-cooperative and low-tax jurisdictions for the next calendar year. Further below we have included all jurisdictions that are included on the list for 2019.

One of the Examples refers to a head office of an international group that is located in a jurisdiction that is designated as a low-tax jurisdiction. The head office has 100 FTE and has a direct participation in a Dutch operational company that has 25 FTE. The Dutch company will not be able to obtain a ruling in respect of the Dutch dividend withholding tax aspects on payments to the head office company, as the head office is located in a low-tax jurisdiction. This Example illustrates that this restriction seems to be applied rather strictly and also applies to operational companies with sufficient operational substance.


To increase transparency, the Dutch tax authorities will publish an anonymised summary of each granted international tax ruling. In addition, and this is new compared to the November Letter, anonymised summaries will also be published of situations in respect of which preliminary consultations have not resulted in the granting of a ruling (to clarify why in these cases no ruling was granted).

It is emphasized that information provided by taxpayers to the Dutch tax authorities is treated as confidential and that the summaries cannot be traced back to individual taxpayers. The summarized rulings in principle not have a precedent effect.


In principle, for rulings issued under the new policy a maximum term of 5 years applies. Exceptions may apply, for instance in case of rulings pertaining to long-term contracts, in which case the maximum duration may extend to 10 years.


The process of granting international tax rulings will also be coordinated more centrally. Before being issued, all international tax rulings applied for will now also need to be signed-off (besides typically the local tax inspector) by a newly formed team within the Dutch tax authorities, called the Team International Tax Certainty.


The new ruling practice should become effective as from 1 July 2019. A plenary debate in Dutch Parliament to discuss the revised tax ruling practice was scheduled for 24 April 2019. As a result of this new policy, published on 23 April 2019, this debate will be rescheduled.

Although the Decree itself does not refer to existing rulings, it seems that such rulings continue to be applicable for the remaining time as included in the rulings (assuming that all relevant conditions are still met).  

Countries included in the Dutch list of low-tax and non-cooperative jurisdictions for 2019:

  • American Samoa
  • Anguilla
  • the Bahamas
  • Bahrain
  • Belize
  • Bermuda
  • the British Virgin Islands 
  • the Cayman Islands Guam
  • Guernsey
  • the Isle of Man
  • Jersey
  • Kuwait
  • Qatar
  • Samoa
  • Saudi-Arabia
  • Trinidad and Tobago
  • the Turks and Caicos Islands
  • Vanuatu
  • the United Arab Emirates
  • the US Virgin Islands