Netherlands: Guidance clarifying meaning of treaty PE for purposes of Pillar Two rules
Confirms that treaty PE is recognized only when source state taxes the attributable income under its domestic law
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april 7, 2026
The tax administration issued guidance clarifying the meaning of a treaty permanent establishment (PE) for purposes of article 1.2(1)(a) of the Minimum Tax Act 2024.
The guidance confirms that a treaty PE is recognized only when the source state taxes the attributable income under its domestic law. It further clarifies that the income must be taxed on a net basis, in a manner comparable to resident taxation, consistent with the separate‑entity principle under article 7 of the OECD Model Convention.
For more information, contact a KPMG tax professional in the Netherlands:
Lieke Mutsaers | mutsaers.lieke@kpmg.com