Multilateral Instrument adopted by Dutch Lower House and Senate

THE NETHERLANDS - Multilateral Instrument adopted by Dutch Lower House and Senate

May 2019

The Netherlands has deposited its Multilateral Instrument (MLI) ratification with the OECD on 29 March 2019 and it will enter into force from 1 July 2019. As a result, tax treaties concluded by the Netherlands might be affected from 1 January 2020.

The MLI is a multi-country convention aiming to close the gaps in existing international tax rules that could lead to tax avoidance. The MLI was designed to ensure a swift implementation of the results of the OECD BEPS Project into bilateral tax treaties worldwide.

The provisions of the MLI will have an impact on a tax treaty as soon as there is a match between jurisdictions that have indicated that:

  1. A certain tax treaty is covered by the MLI; and
  2. The positions taken by the jurisdictions in relation to the MLI also have a match.

Once there is such a match for a tax treaty between two jurisdictions, and both jurisdictions ratified the MLI, the MLI will have an effect on withholding taxes on the first day of the calendar year following the date on which the MLI enters into force for these two jurisdictions. For corporation tax, the MLI will have effect for periods starting six months after the date of entry of the MLI.

As the MLI has been ratified on 29 March 2019 in Netherlands and enters into force from 1 July 2019, it will have effect on withholding taxes and corporation tax – in the event that the financial year equals the calendar year – from 1 January 2020 at the earliest. This will be the case if the tax treaty partner has also ratified the MLI with an entry into force date of ultimately 1 July 2019.


The MLI allows for some choices to be made by countries. This could imply a difference in position, or an entire opt-out of a certain provision. Only if countries decide on accepting the exact same position on a certain provision, it will be applied under the respective tax treaty.

The Dutch Lower House takes the position that the MLI does not lead to an effective conflict resolution mechanism on the matter of the definition of a permanent establishment (PE) or a manner in which profits should be allocated to a PE (Article 12 of the MLI).

Until such an effective conflict resolution mechanism is implemented or clarity on profit allocation under the MLI is given, the Netherlands will opt-out of Article 12 of the MLI. Article 12 of the MLI broadens the definition of a PE by including so-called commissionaire structures into its definition in the covered tax treaty.

This position is re-evaluated at the end of 2020 and the Netherlands may opt-in if enough progress is made on the aforementioned issues. If the Netherlands does opt-in to Article 12, the provision would come into force on 1 January 2022.


The Netherlands has 82 tax treaties covered in the MLI. The specific impact of the MLI differs per tax treaty and depends on the position taken by both countries. If you want to know whether a business is impacted by the MLI, BDO can assist with this analysis.

Hans Noordermeer
[email protected]

Niek de Haan
[email protected]