Netherlands: Dutch government appeals EC decision | KPMG | GLOBAL

Netherlands: Dutch government appeals EC decision, concerning APA

Netherlands: Dutch government appeals EC decision

The government of the Netherlands announced that it will appeal an October 2015 decision of the European Commission, that an advance pricing agreement (APA) concluded between a corporate taxpayer and the Dutch tax authorities qualifies as “forbidden State Aid.” The government’s position in filing an appeal is that the Dutch tax authorities consistently apply internationally accepted methods and that the EC’s approach “raises a lot of questions.”


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According to the Dutch government, the EC used criteria that deviate from article 9 of the OECD Model Income Tax Treaty (the “arm’s length” criterion) and from the OECD transfer pricing guidelines that are based on article 9 of the OECD Model Income Tax Treaty. According to the government of the Netherlands, the approach used by the EC has no basis in internationally accepted principles. In its 27 November statement, the Dutch government reiterated its position that international tax avoidance must be addressed without harming the Dutch investment climate. In this respect, the Dutch government announced some new initiatives (described below).

KPMG observation

At issue in the appeal will be whether the EC position is correct—that for state aid purposes, whether the EU’s principle of equal treatment can override internationally accepted OECD transfer pricing rules. If the Court of Justice of the European Union (CJEU) were to uphold the EC’s position, the question then becomes how would the CJEU  interpret the state aid criteria, especially the selectivity criterion in a tax case that concerns the setting of prices for services performed between related group companies. If, however the CJEU were to hold that the OECD transfer pricing guidelines are to be the point of reference also for application of the EU state aid rules, the question then becomes whether the EC has the authority within the framework of the state aid rules to monitor application of these rules in specific instances and to override judgments by the national tax authorities or national tax courts. A decision by the CJEU would like affect the ongoing debate among EU institutions, including the EU Parliament, and the individual EU Member States on the issue on tax sovereignty.

New initiatives announced

On 27 November 2015, the government of the Netherlands also announced initiatives within the framework of its ongoing effort of addressing international tax avoidance while maintaining a favorable investment climate in the Netherlands.

  • In spring 2016, the Netherlands will publish a legislative proposal that will prohibit trust companies from supplying services if these services relate to the implementation of structures that are designed to maintain the anonymity of the ultimate beneficiary. From the announcement, it is not clear whether this proposal only focuses on cross-border situations or whether purely internal Dutch situations are covered as well.
  • A study will be performed on the difference in treatment between NVs, BVs and cooperatives for the application of the Dutch dividend withholding tax in an international context.
  • During its upcoming EU Presidency, the Netherlands will aim at a further increase of tax transparency. As part of this initiative, the Netherlands is going to advocate for publication of the guidelines of the EU Code of Conduct.

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