Study shows that an adaptation in the issuance of rulings is necessary

The Tax and Customs Administration has studied the issuance of 4,462 rulings with an international component. This study shows that the internal procedures for issuing rulings were not always observed correctly  in all cases. In 6 cases of the 3,101 rulings issued by the APA/ATR team it could not be established whether the procedures had been observed correctly. In 72 of the 1,361 other rulings procedural errors were established. The National Audit Service was also involved in this investigation.

Certainty in advance

The State Secretary of Finance, Mr Snel, informed the House of Representatives that the results of this study were also a reason to revise the practice of issuing rulings. The revision concerns the issuance and content of the rulings. The cabinet remains committed to creating clarity at an early stage and settle discussions between taxpayers and Tax and Customs Administration ‘at the front’. Mr Snel: “The possibility to consult a tax inspector and providing certainty in advance are key elements in the supervision of the Tax and Customs Administration and an important feature of our business climate.” In view of the intention of the cabinet, as stated in the coalition agreement, to counter letterbox constructions, the question is whether certainty should be given to companies in advance which only make a limited contribution to the real economy. This is why I am investigating a tightening of the substance requirements.”

Mr Snel announced that he would include the options in his investigation that were described by his predecessor with regard to adapting the substance requirements, so that only companies which have a real added value in the Netherlands can obtain a ruling. Mr Snel will also examine to what extent providing certainty in advance is still appropriate with all fiscal structures.

Central coordination

In order to further guarantee the quality and strength of the Dutch ruling practice, Mr Snel wants the issuance of rulings to be coordinated on a more central level, so that there is a greater grip on the process of issuing. It will also further guarantee the quality of the process. Moreover, it will also guarantee the unity of policy and implementation. Laying down the process in an unambiguous and clear way is also part of this. Clear competence regulations and work instructions will also be developed, so that there will not be any doubts about the process of issuing rulings. Administrative information will be more easily available with centralized coordination. This contributes to the wish to create a greater transparency.

Observed procedures

With the rulings issued by the APA/ATR team 1 ruling does not have a second signature. However, the content of this ruling has been found to be correct. With 2 rulings the second signer also signed for the first signer. Three rulings still have to be assessed, because the physical files are not available yet.

The procedures in the 1361 rulings issued outside the APA/ATR team have not been observed more often. With 72 rulings it was established that the procedures were not observed correctly. Sixty-three of these rulings were incorrectly not submitted to the APA/ATR team. An incorrect content as regards tax-related matters was established in 2 cases. For 3 rulings it was judged that this content was likely to be incorrect. At present the Tax and Customs Administration is taking action to terminate or adapt these arrangements.

An advisory group with external independent experts will function as a soundboard for the changes. The State Secretary also wants to hold a broader consultation about the changes. The planning is that the new design of the ruling practice will be ready as of 1 January 2019.

At present the investigation concerning the content of rulings which have been issued by the APA/ATR team is ongoing. This investigation will be carried out by an independent commission. The results will also be used in the review. Mr Snel will send these results to the House of Representatives as an appendix with the next half-yearly report of the Tax and Customs Administration.

Ministry responsible