Tax Alert: Exchange of tax rulings, a Dutch practice update

Tax Alert: Exchange of tax rulings, a Dutch practice update

Aug 24, 2016

Both the OECD/G20 and EU have introduced rules aimed at improving transparency on tax rulings granted by jurisdictions. As part of the outcomes of Action 5 of the OECD/G20 BEPS Project, a framework for the compulsory spontaneous exchange of information regarding rulings was approved. Similarly, the amendments of EU Directive 2011/16/EU provide for the mandatory spontaneous exchange of information between Member States.

The Dutch Tax Authorities have already started to prepare for the anticipated exchange of rulings. They have developed an ‘Exchange of Tax Ruling’ form that applies to rulings granted since 1 January 2010 and applicable after 1 January 2014. The form must be sent to the Dutch Tax Authorities within three weeks once requested. The Dutch Tax Authorities aim to share all the forms before the end of 2016.

A ruling is considered to be “any advice, information or undertaking provided by a tax authority to a specific taxpayer or group of taxpayers concerning their tax situation and on which they are entitled to rely”.

The schematic below illustrates the timing of the exchange:  

 

 Under the OECD Framework, exchange of information on the rulings will need to be completed by 31 December 2016.

Form content and ‘Affected entities’

The content of the form includes general information on the taxpayer and the type, the duration and a summary of the ruling. Further, identification information on the so-called ‘Affected entities’ is included. 

The forms will be exchanged with the tax authorities of the ‘Affected entities’. ‘Affected entities’ are the ultimate parent company, the immediate parent company and (depending on the ruling) ‘all related entities with whom the taxpayer enters into transactions that are covered by the ruling’.

Some typical questions are:

  • What would be the relevant date for evaluating the impact of the ruling? Is the form static or dynamic? Affected entities may change over the period of the ruling….

  • How to interpret the phrase ‘transactions that are covered by the ruling’ to identify affected parties?

  • Why is non mandatory information (revenue, profit) requested? Would it be advisable to include this data?

  • What happens if the form is filed too late (e.g., if the client is not made aware of the form in time because it was sent to a previous advisor that that is no longer engaged)? 

  • How is the data protected?

  • What will be the next step in transparency on rulings?

  • Will a taxpayer be informed if data in the form is adjusted or completed by the tax authorities?

  • Will a taxpayer be informed if data in the form is adjusted or completed by the tax authorities?

  • What are the consequences if no form is submitted by a taxpayer?

 

For additional information, please contact:

Richard Slimmen

Managing Director

Quantera Global                                                       

M: + 31 6 50 88 94 37                                                    

E: r.slimmen@quanteraglobal.com