Advance Tax Certainty for International Structures
An Advance Tax Ruling (ATR) is a binding agreement between the Dutch tax authorities and a taxpayer on the future application of Dutch tax law in a specific cross-border context. Like an APA, an ATR provides legal certainty in advance, typically for a period of four years.
ATRs are widely used in international corporate structures, investment platforms, and tax planning scenarios where the correct application of Dutch tax law may be subject to interpretation.
Dutch ATR Practice
The current Dutch ATR practice was introduced in 2001 and refined in 2004. The aim was to align Dutch procedures with OECD principles and ensure international credibility. Today, the Netherlands remains one of the most transparent and cooperative jurisdictions for ruling practices.
Dutch ATRs are only available to taxpayers that meet the Dutch substance requirements and are not set up to avoid taxation artificially.
Scope of ATRs
An ATR may cover a wide range of international tax matters, including:
- Participation Exemption
Advance certainty can be obtained on whether the Dutch participation exemption applies to:
- Intermediate holding companies in cross-border structures, and
- Ultimate holding companies, even if their subsidiaries are not active in the Netherlands.
- Hybrid Instruments and Entities
The Dutch authorities may confirm how they treat hybrid financial instruments (e.g. convertible debt) and hybrid entities (e.g. partnerships with different tax classifications in other countries).
- Permanent Establishment (PE)
An ATR can confirm whether a permanent establishment (PE) exists in the Netherlands in the case of a foreign company with operations or personnel in the country.
This clarity is essential for foreign companies seeking to understand their Dutch tax obligations and mitigate permanent establishment risk.
ATR Conditions and Timeline
An ATR is normally concluded for a four-year period and is only available to taxpayers with a genuine presence and commercial rationale in the Netherlands. As with APAs, the entity must meet key substance and, where relevant, risk capital criteria.
The application process involves:
- A detailed pre-filing meeting with the Dutch tax authorities,
- Preparation of a well-supported ruling request, and
- A formal agreement upon acceptance of the scenario.
Why Choose TaxGate for ATR Requests?
At TaxGate, we understand the complexities of international tax planning and Dutch ruling practice. We provide tailored guidance on:
- Structuring international holdings and financing platforms,
- Preparing robust ruling requests, and
- Managing communications with the Dutch tax authorities.
Looking to secure an ATR in the Netherlands?
We help international businesses establish clarity and compliance from the start.