MLI Matching Overview
On 7 June 2017, the multilateral instrument (MLI) was signed covering 68 jurisdictions, including the Netherlands, Belgium, Luxembourg and Switzerland. In the meantime several other jurisdictions have signed the MLI raising currently the number to 87 signatories. The MLI should accelerate the implementation of key Base Erosion and Profit Shifting (BEPS) measures into a large number of bilateral tax treaties. The overview below shows whether the bilateral tax treaties of the four jurisdictions with their most important treaty partners are so-called ‘Covered Tax Agreements’ (CTA) to which the MLI applies.

Moreover, it sets out the impact of the so-called principal purpose test (“PPT”) of article 7 of the MLI (“MLI PPT”) on those CTAs. The PPT is an anti-abuse provision that should deny application of treaty benefits in certain situations.
A number of outcomes regarding the PPT are possible between treaty partners:
- PPT applies
Existing provisions in the CTA that already contained a principal purpose test are replaced with the MLI PPT or, in the absence of existing provisions, the MLI PPT is added to that CTA.
- PPT + DR applies
Same as ‘PPT applies’, but both jurisdictions have opted for the discretionary relief clause of article 7(4) of the MLI. The latter clause provides discretion to the authorities of the treaty parties to allow application of tax treaty benefits in certain situations where the PPT is applicable.
- PPT applies, but intended as interim measure by treaty partner
Certain countries have expressed an intention to negotiate limitation-on-benefits (“LOB”) provisions with their treaty partners but will apply the MLI PPT in the meantime. None of the Netherlands, Belgium, Luxembourg and Switzerland has expressed such intention.
- PPT applies to the extent existing CTA provisions are incompatible
If there is an existing provision in the CTA that contains a principal purpose test but that has not been properly notified to the OECD by both treaty partners, the MLI PPT is added to the treaty and supersedes the existing CTA provisions to the extent the latter are incompatible with the MLI PPT.
In certain instances there is no bilateral tax treaty in place between the Netherlands, Belgium, Luxembourg or Switzerland and the other jurisdiction. In such cases, the overview shows ‘No DTT’.
The multilateral instrument (MLI) table
Covered Tax Agreement | Principal Purpose Test | |||||||
Art. 2 | Art. 7(1) - 7(5) | |||||||
NL | BE | LUX | CH | NL | BE | LUX | CH | |
Argentina | Yes | Yes | No DTT | Yes | PPT applies | PPT applies | No DTT | PPT applies |
Australia | Yes | Yes | No DTT | No | PPT + DR applies | PPT + DR applies | No DTT | x |
Austria | Yes | Yes | Yes | Yes | PPT applies | PPT applies | PPT applies | PPT applies |
Belgium | No | - | Yes | No | x | - | PPT + DR applies | x |
Canada | Yes | Yes | Yes | No | PPT applies, but intended as interim measure by treaty partner | PPT applies, but intended as interim measure by treaty partner | PPT applies, but intended as interim measure by treaty partner | x |
Chile | No DTT | Yes | No DTT | Yes | No DTT | PPT applies, but intended as interim measure by treaty partner | No DTT | PPT applies, but intended as interim measure by treaty partner |
China (People’s Republic of) | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Cyprus | No DTT | Yes | No DTT | No | No DTT | PPT + DR applies | No DTT | x |
Czech Republic | Yes | Yes | Yes | Yes | PPT + DR applies | PPT + DR applies | PPT + DR applies | PPT applies |
Denmark | No | Yes | Yes | No | x | PPT applies | PPT applies | x |
France | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Germany | Yes | No | Yes | No | PPT applies | x | PPT applies | x |
Greece | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Hong Kong (China) | Yes | Yes | Yes | No | PPT applies to the extent existing CTA provisions are incompatible | PPT applies | PPT applies | x |
India | Yes | Yes | Yes | Yes | PPT applies | PPT applies | PPT applies | PPT applies to the extent existing CTA provisions are incompatible |
Indonesia | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Ireland | No | Yes | Yes | No | x | PPT + DR applies | PPT + DR applies | x |
Israel | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Italy | Yes | Yes | Yes | Yes | PPT applies | PPT applies | PPT applies | PPT applies |
Japan | Yes | No | Yes | No | PPT applies | x | PPT applies | x |
Korea | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Luxembourg | Yes | Yes | - | Yes | PPT + DR applies | PPT + DR applies | - | PPT applies |
Malta | Yes | Yes | Yes | No | PPT + DR applies | PPT + DR applies | PPT + DR applies | - |
Mexico | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Netherlands | - | No | Yes | No | - | x | PPT + DR applies | x |
Poland | No | Yes | Yes | Yes | x | PPT applies, but intended as interim measure by treaty partner | PPT applies, but intended as interim measure by treaty partner | PPT applies, but intended as interim measure by treaty partner |
Portugal | Yes | Yes | Yes | Yes | PPT applies | PPT applies | PPT applies | PPT applies |
Romania | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Russia | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Singapore | Yes | Yes | Yes | No | PPT + DR applies | PPT + DR applies | PPT + DR applies | x |
Spain | No | Yes | Yes | No | x | PPT applies | PPT applies | x |
Sweden | Yes | Yes | Yes | No | PPT applies | PPT applies | PPT applies | x |
Switzerland | No | No | Yes | - | x | x | PPT applies | - |
Turkey | Yes | Yes | Yes | Yes | PPT applies | PPT applies | PPT applies | PPT applies |
United Kingdom | Yes | Yes | Yes | No | PPT + DR applies | PPT + DR applies | PPT + DR applies | x |
Uruguay | No DTT | Yes | Yes | No | No DTT | PPT + DR applies | PPT + DR applies | x |
This high level overview is provisional and cannot be seen as tax and/or legal advice. Please contact one of our MLI specialists before taking any action based on this publication.
Natalie Reypens
Partner Attorney at LawNatalie Reypens is a member of the Loyens & Loeff International Tax Services Practice Group and heads the Belgian Transfer Pricing Team. She is a partner in our Brussels office. She focuses on corporate and international tax law.
T: +32 2 743 43 37 E: natalie.reypens@loyensloeff.com