Netherlands sets out response to BEPS reports

The Dutch Secretary for Finance, Eric Wiebes, has reported to the House of Representatives on the impact of the Organisation for Economic Co-operation and Development’s (OECD) base erosion and profit shifting (BEPS) project on Dutch tax rules. His letter, published on the Dutch Government website on 19 October, splits measures into those that concern domestic legislation; those that require international efforts; and those that will lead to an ongoing change in Dutch policies.

The Dutch Secretary for Finance, Eric Wiebes, has reported to the House of Representatives on the impact of the Organisation for Economic Co-operation and Development’s (OECD) base erosion and profit shifting (BEPS) project on Dutch tax rules. His letter, published on the Dutch Government website on 19 October, splits measures into those that concern domestic legislation; those that require international efforts; and those that will lead to an ongoing change in Dutch policies.

He commented: "The Government believes that combating international tax avoidance and abuse is socially desirable and that measures are unavoidable. At the same time, we must ensure that fair competition and employment in the Netherlands are safeguarded".

"Our system has always taken account of companies that operate internationally, and ensures that national and multinational companies are treated equally. The participation exemption, the absence of withholding tax on interest and royalties, our extensive treaty network, and providing certainty in advance are therefore not in themselves up for discussion".

On proposals to amend domestic law, he said the Government sees transparency and automatic exchange of tax information as a key weapon against tax avoidance. The BEPS reports contain a minimum standard for the mandatory spontaneous exchange of information on rulings (action 5), and the Netherlands aims to play a leading role in this regard, he said.

Dutch legislation on country-by-country reporting will enter into force on 1 January 2016. In addition, the tax administration will already start exchanging information on rulings on the basis of this OECD standard in 2016. In addition, on 14 July 2015 the Netherlands and Germany signed an agreement to begin the spontaneous exchange of information on rulings as soon as possible. The Netherlands also supports the European Commission's initiative on the automatic exchange of information on tax rulings.

He said the Netherlands already meets the minimum standard for dispute resolution (action 14) and changes will be made to the nation's patent box regime to bring it into line with international standards.

Finally, he said the Government will promote Dutch policy and strengthen it where necessary: "I list the main strengths of the Dutch tax system. While these strengths entail a – limited – risk of abuse, unfocused, and disproportionate countermeasures could have major consequences for the Dutch tax climate for businesses. The Netherlands has promoted these features of its tax system during discussions within the OECD and the European Union and will continue to do so in the future. The Government considers the main strong points of our tax system to be our extensive treaty network, the participation exemption, absence of withholding tax on interest and royalties, our efficient tax administration, and our efficient dispute resolution procedures".

"These elements help to create a transparent, clear, and attractive tax climate for international businesses. Where the BEPS reports touch on these advantages, the Government is prepared to make them more robust to prevent abuses", he concluded.

Source: Baker Tilly International