This approval concludes the domestic ratification procedure. If the Netherlands deposits the ratification bill with the OECD prior to 1 April 2019, the MLI will have a general entry into effect for the Netherlands as from 1 January 2020. The entry into effect of the MLI is likely to affect the entitlement to tax treaty benefits under covered tax treaties concluded by the Netherlands.


On 5 March 2019, the Upper House of Dutch Parliament approved the MLI ratification bill. The approved bill follows the provisional list of choices and reservations notified by the Netherlands to the OECD in June 2017 (see our Tax Flash) apart from the amendment made by the Lower House as part of their approval of the bill on 12 February 2019. This amendment led to a (temporary) full reservation (opt-out) of art. 12 MLI, which targets the artificial avoidance of the permanent establishment (“PE”) status through anti-commissionaire arrangements.

The Netherlands has opted for the so-called principal purposes test (“PPT”), like all other jurisdictions that signed the MLI. The PPT is an anti-abuse rule that should deny in certain situations application of treaty benefits, such as for dividends and capital gains. It will be increasingly relevant to demonstrate business purposes of an arrangement or transaction. It is recommended to verify to what extent restructurings would be helpful before 2020.

The Netherlands opted in for most of the MLI measures in its tax treaties. With the completion of its domestic procedures, the Netherlands will now have to deposit the ratification bill with the OECD in order to bring the MLI into force. As from 1 January 2020, the MLI should apply in respect of withholding taxes for the covered tax treaties concluded by the Netherlands with other jurisdictions that already completed the MLI ratification process or will do so prior to 1 October 2019. With respect to all other taxes, such as corporate income tax, the MLI will have an impact on tax years starting on or after at least nine months after the Netherlands or the other treaty jurisdiction has deposited the ratification instrument with the OECD (whichever date is latest).

The Netherlands listed 82 out of its 94 tax treaties to be brought under the scope of the MLI. Based on the (provisional) choices of its treaty partners, the Netherlands expects 51 of its tax treaties to be affected by the MLI. So far, overall 21 jurisdictions completed their MLI ratification procedures. On the basis of the deposits published as of 5 March 2019, it is expected that the MLI will apply as from 1 January 2020 to the following tax treaties concluded by the Netherlands: Australia, Austria, Finland, France, Israel, Japan, Lithuania, Malta, New Zealand, Poland, Serbia, Singapore, Slovak Republic, Slovenia, Sweden and the UK. It is also expected that the MLI will apply to the tax treaty concluded with Luxembourg as from 1 January 2020. Over time, more tax treaties will be covered as ratification progresses in other jurisdictions.

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