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Errors Found In Dutch Tax Rulings

by Ulrika Lomas,, Brussels

21 February 2018

The Netherlands could restrict the number of tax rulings it issues after an investigation of 4,462 tax rulings by the Dutch tax authority found that procedural errors were made in 78 cases.

The investigation was launched following a report by Dutch daily newspaper Trouw last year, which showed that the correct procedures were not applied when a tax ruling was issued to consumer goods company Procter and Gamble.

According to the Ministry of Finance, although in the majority of cases internal procedures were followed correctly, they were not "followed flawlessly in all cases."

The investigation found that of the 3,101 rulings issued by the department concerned with advanced pricing agreements and advanced tax rulings, it could not be established that the correct procedures were followed in six cases.

Of another 1,361 cross-border rulings studied as part of the investigation, a further 72 were found to have contained errors.

In a letter to the lower house of the Dutch parliament, State Secretary for Finance Menno Snels wrote that while the Government intends to retain the practice of issuing rulings on uncertain tax positions, the results of the investigation show that certain changes to the system need to be made.

"Prior consultation and giving certainty in advance are core elements in the supervision of the tax authorities and are an important pillar of our business climate," Snels wrote.

Snels suggested that, in future, only companies with sufficient economic substance in the Netherlands would be entitled to apply for a tax ruling.

"The question is, given the Cabinet's intention in the coalition agreement to counter letter box companies, whether certainty needs to be given in advance to companies that make a limited contribution to the real economy," Snels wrote.

Snels said that the Government intends to consult on changes to tax ruling practices this year, ready for a new system to be in place by January 1, 2019.

TAGS: Finance | tax | business | Netherlands | law | tax authority | agreements

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