An advance tax ruling (ATR), like an advance tax agreements (APA), is a binding agreement between the Dutch tax (and customs) authorities and the taxpayer on the application of Dutch tax law. Such rulings ensure a certainty in advance of the acceptability of a certain scenario. The Netherlands has a modern and reliable system for obtaining advance tax and pricing rulings. The current practice is the result of a restructuring in 2001, where the practice was brought in line with OECD principles. In this respect, a number of resolutions were issued (and some updated in 2004), describing the Dutch ruling practice.
An ATR under the Dutch ruling practice can cover for instance the following three topics:
- Participation exemption
Applicability for intermediate holding companies in international situations and for ultimate holding companies (if none of the subsidiaries of the holding company have activities in the Netherlands).
- International structures
In case of hybrid financing instruments and/or hybrid entities.
- Permanent establishment
Whether a Dutch permanent establishment of a foreign enterprise exists.
In general, ATRs may be requested and concluded (in the form of an agreement with the Dutch tax authorities) for a period of four years.