Conclusion
The New Tax Arrangement appears to be a sign of the times. It clearly aims to curb perceived abuse, both known (e.g. Coop-N.V. structures) and unknown. To that end it contains a general anti-abuse provision, a LOB-like provision and certain specific anti-abuse provisions. The drafting may well have been influenced by the international discussion regarding base erosion and profit shifting (BEPS). On the other hand, the New Tax Arrangement has a very modern feel as it follows the OECD Model and dispenses with all withholding taxes in many situations.
With its many opportunities for mutual agreements, it opens the door to bespoke solutions for specific situations. One could wonder whether there is a risk that the competent authorities could be overwhelmed by the sheer number of competent authority request now that many – also relatively common (hybrid entities, dual residents) – situations require competent authority approval. That said, the Dutch tax authorities are accustomed to an active and open dialogue with taxpayers.
Finally, according to the explanatory memorandum, the Netherlands will also conclude new tax arrangements with Aruba and Sint Maarten respectively. Until these tax arrangements will become effective the 1964 Tax Arrangement remains applicable (and will be terminated thereafter). We will update you accordingly when these two tax arrangements are published.