In the Netherlands it is possible to discuss your specific tax position with the Dutch tax authorities and mutually agree on the tax consequences thereof. The Dutch tax authorities and the taxpayer are bound by the agreement they make. The agreement has to be regarding the interpretation and qualification of facts. The ruling has to be in conformity with the Dutch tax legislation. In other words the agreement cannot be in conflict with the Dutch tax legislation (contra legem). In August 2004, the Dutch ruling policy was formalized in an advance tax ruling (ATR) policy and an advance pricing agreement (APA) policy.

Dutch advance pricing agreement (APA)

An APA covers the agreement on an at arms’ length remuneration or on the transfer pricing methodology. The basis for an APA is a transfer pricing study. The Dutch tax authorities and the tax payer agree that the outcome of the transfer-pricing study would form the basis for the determination of the income for Dutch corporate income tax purposes.

Dutch advance tax ruling (ATR)

A Dutch advance tax ruling (ATR) covers the Dutch tax treatment of specific facts and circumstances. Typically a Dutch advance tax ruling (ATR) can cover:

the application of the Dutch participation exemption (one-pager available)
the Dutch tax consequences of hybrid entities
the Dutch tax consequences of hybrid financing
the application of Dutch foreign tax payer rules, and/or
the existence of a permanent establishment in the Netherlands.

When concluding a Dutch advance tax ruling (ATR) it is important to agree on the facts and circumstances as these form the basis of the agreement. In case the facts and circumstances change, then it might be worthwhile to determine if, and if so, to what extent faith can be derived from the concluded advance tax ruling (ATR). Our vast experience in negotiating these Dutch advance tax rulings (ATR) and Dutch advance pricing agreements (APA) helps our clients in getting a reliable agreement to minimize the possibility of surprises.

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