Netherlands: New guidance on mandatory disclosure rules (DAC6)

New guidance on the mandatory disclosure rules (DAC6) was published on 28 April 2023, replacing an earlier version from 2020, and includes a number of substantive changes including:

• Construction: The guidance clarifies that an adjustment to an existing arrangement can also lead to a new notifiable cross-border arrangement. This may be the case, for example, if the participants in the arrangement (or their legal form or tax residence) changes or if the form of financing changes. There may also be a (new) notifiable cross-border arrangement without another essential characteristic being applicable.
• Participant: The guidance provides a further explanation of the term “participant.” To qualify as a participant, a person must have a certain degree of involvement in the arrangement. This involvement can be evidenced, for example, by making a board decision, or being subject to accounting or tax consequences. The guidance also notes that there may also be a cross-border arrangement with one participant, giving the example of a transfer between a head office and its permanent establishment abroad.
  
• Intermediary: If an intermediary with legal privilege invokes the right of non-disclosure and therefore does not report a reportable arrangement, the intermediary must notify other intermediaries (or under certain circumstances, the relevant taxpayer). The guidance also describes activities for which a person who exclusively performs these activities does not qualify as an (auxiliary) intermediary (e.g., preparing and filing a tax return, or preparing or updating transfer pricing documentation). In principle, these activities do not lead to a notification obligation.
  
• Main benefit test: Some arrangements only have to be reported if the “main benefit test” is also met. The prior guidance stated that if the main advantage of an arrangement is obtaining a tax benefit that is fully in line with the intention of the legislator—the so-called “policy intent”—the main benefit test is not met. The new guidance removed that provision and states that the fact that a tax benefit is in line with the intention of the relevant scheme can be taken into account for the main benefit test, but it is not determinative.
  
• Hallmarks: The hallmarks are discussed in the guidance through more than 30 stylized examples. The guidance includes new examples of the conversion of income into assets, gifts or other income categories that are taxed at a lower rate, as well as relating to the cross-border transfer of functions and/or risk and/or assets within the group when the estimated earnings before interest and taxes (EBIT) of the transferor during the three-year period after the transfer is reduced by at least 50%.

Read a May 2023 report (Dutch) prepared by the KPMG member firm in the Netherlands