• It has been clarified in the Updated Decree that an adjustment in an existing arrangement may be subject to a new reporting obligation if the circumstances underlying the cross-border arrangement change. This could include the situation where, because of an action, there are changes with respect to the participants (like the legal form or tax residency) or if new participants are added to the reportable cross-border arrangement. A reporting obligation will in any case arise if another hallmark is applicable to the adjusted arrangement. Also without the application of another hallmark there may be a (new) reportable arrangement.

  • The term ‘participant’ has been further clarified in the Updated Decree. It depends on the facts and circumstances in a specific case which persons (whether tax transparent or not) are considered to be participants with respect to the arrangement. It is noted that a person should be involved to some extent in the arrangement to qualify as a participant. It is clarified that a person is considered to be sufficiently involved if – for instance – a board resolution is taken or if the arrangement leads to accounting or tax consequences. It is furthermore clarified that a cross-border arrangement can be recognized if there is only one participant. An example entails a transaction between a head office and a foreign permanent establishment.

  • In its decision of 8 December 2022, the Court of Justice of the EU (CJEU) ruled that the EU Mandatory Disclosure Directive infringes the right to respect for communications between an attorney and his or her client if an attorney-intermediary, subject to attorney client privilege, is required to notify any other intermediary not being his or her client. The Updated Decree states that this judgment only applies to Dutch attorneys that can invoke the attorney client privilege but not to other intermediaries who can also invoke the legal professional privilege, for example Dutch (candidate-) civil law notaries. As a result, Dutch attorneys should notify their clients only, but Dutch (candidate-) civil law notaries should notify any other intermediary involved or, if there is no such intermediary, the relevant taxpayer of their reporting obligations. The question whether the notification obligation is contrary to EU law for other intermediaries who can invoke the legal professional privilege is currently before the CJEU.

  • The generic hallmarks and some of the specific hallmarks only apply if the main benefit test (MBT) is satisfied. The Updated Decree states that if a tax advantage is expressly anticipated or intended by the legislator, which is known as policy intent, the arrangement that results in the intended tax advantage can still fall within the scope of the MBT. 


Hallmark B.2

With regard to hallmark B.2. the Updated Decree clarifies that the conversion of income does only relate to a conversion of existing income. This means that Hallmark B.2. should not be applicable to newly set-up structures in which no existing income is (yet) recognized.   

Hallmark E.3

For purposes of hallmark E.3 it is relevant to assess whether the transferor’s commercial EBIT decreased with more than 50% following the intragroup cross-border transfer of functions and/or risks and/or assets. The Updated Decree includes a new position for entities with a financial objective (for example holding and/or financing entities) with respect to the application of the EBIT-test for purposes of hallmark E.3. For entities with a financial objective, the Updated Decree states one should look at the core business of the relevant entity. This means that if an entity conducts financing activities, the financing results should be taken into account when calculating the EBIT and assessing the application of hallmark E.3. 

Should you have any questions with respect to the Updated Decree, please contact a member of our DAC6 team or your regular trusted contact at Loyens & Loeff.