The Dutch House of Representatives Approves Multilateral Instrument (MLI)

; posted on
February 14th, 2019

The House of Representatives of the Netherlands of the Dutch Parliament approved the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI).  The ratification bill is yet to be approved by the Upper House (Eerste Kamer). In all other respects, the approved bill confirms the provisional list of choices and reservations notified by the Netherlands to the OECD in June 2017.


The MLI, which the Netherlands signed in Paris in 2017, gives possibility to the jurisdictions to swiftly implement the results of the BEPS project in more than 1,000 international tax treaties. In the context of the Netherlands, up to date, 82 out of 94 tax treaties are to be brought under the scope of the MLI. Based on the (provisional) choices of its treaty partners, the Netherlands expects 51 of its tax treaties to be affected by the MLI.

At the time of signature, the Netherlands submitted its provisional list of notifications and reservations as followed:

  1. Article 3 (transparent entities): The Netherlands reserves the right for paragraph 1 not to apply to its Covered Tax Agreements that already contain a provision described in Article 3(4).
  2. Article 11 (Application of Tax Agreements to Restrict a Party's Right to Tax its Own Residents): The Netherlands reserves the right for the entirety of Article 11 not to apply to its Covered Tax Agreements.
  3. Article 14 (Splitting-up of Contracts): The Netherlands reserves the right for the entirety of Article 14 not to apply to its Covered Tax Agreements relating to the exploration for or exploitation of natural resources.
  4. Article 26 (Compatibility): The Netherlands reserves the right for Part VI not to apply with respect to the following agreements that already provide for mandatory binding arbitration of unresolved issues arising from a mutual agreement procedure case.


In the newly approved MLI version, the provisional list of reservations and notifications remained the same unless for article 12. As part of the approval, the Lower House instructed the Dutch government to opt out of the “anti-commissionaire provision” article until at least year-end 2020. Article 12 MLI targets the artificial avoidance of the permanent establishment ("PE") status through inter alia commissionaire arrangements by broadening the “agency PE” definition in existing bilateral tax treaties.

The reservation will be made until the effective conflict resolution between many MLI members and the Netherlands is in place. The Dutch government has to ensure that there would be clarity about the rules concerning profit allocation or there would be effective conflict resolution, for example by drawing up arbitration clauses with many MLI members. If sufficient progress is made on these issues, the government could submit a proposal by the end of 2020 to withdraw the reservation.

Under the applicable entry into effect rules of the MLI, a withdrawal of the Dutch reservation, meaning an opting into art. 12 of the MLI, will then generally be effective at the earliest for tax years beginning on or after 1 January 2022.

Source: House of Representatives of the Netherlands

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