Bill on approval of multilateral treaty | Deloitte


Bill on approval of multilateral treaty

The Dutch government recently sent a bill to the House of Representatives for approval of the multilateral treaty preventing base erosion and profit shifting.

10 January 2018


The Base Erosion and Profit Shifting project (BEPS project) of the Organization for Economic Cooperation and Development (OECD)/G20 among other things provides for the introduction of measures to combat improper use of tax treaties and improve dispute settlement. The multilateral treaty implements these changes in existing tax treaties rapidly, consistently and in a coordinated manner, without bilateral negotiations being required. The treaty will apply alongside existing tax treaties.

Contents of the treaty

The multilateral treaty first and foremost aims to implement treaty provisions neutralising hybrid mismatch structures. In addition, it contains a number of articles to counter treaty abuse. The treaty also includes several provisions relating to artificial avoidance of the permanent establishment status. Furthermore, the treaty attempts to improve the procedure for mutual consultation. Finally, it contains several provisions on obligatory and binding arbitration if the competent authorities of countries are unable to settle a dispute about the application of the respective tax treaty within two years.


The multilateral treaty has already been signed by 70 countries. The countries have been given the opportunity to indicate which tax treaties they wish to bring under the scope of the treaty. Furthermore, they have been able to indicate which options (options within specific provisions) and reservations (options to not or only partially apply specific measures) they wish to use. The provisions apply to a bilateral tax treaty if two conditions are met. Firstly, both treaty partners should have brought the tax treaty they have concluded under the scope of the multilateral treaty. Secondly, they should both have accepted the application of a specific measure to their bilateral treaty relationship.


Application of the multilateral treaty to tax treaties concluded by the Netherlands first requires the Dutch Parliament to approve of the multilateral treaty. A bill to that effect was recently submitted to the Dutch House of Representatives. Since the provisions will also apply to Curaçao, this concerns a Bill introducing a Kingdom Act (Voorstel van Rijkswet). The governments of Aruba and Sint Maarten, however, have indicated they do not wish application of the treaty to be extended to these countries.

According to the Dutch State Secretary for Finance, the Netherlands applies an ambitious approach by incorporating more anti abuse provisions than many other countries. The starting point was not to make any reservations with respect to the provisions in the multilateral treaty. The Netherlands has concluded over 80 tax treaties with other countries. The anti-abuse provisions contained in the multilateral treaty will be introduced in more than 40 of the tax treaties concluded by the Netherlands in one go. This number will increase further if more Dutch treaty partners sign the multilateral treaty in the future.

Effective date

The multilateral treaty will become effective three months after it has been ratified by the fifth country. To date only Austria, the Isle of Man and Jersey have ratified the treaty. The expected time path for the Dutch ratification is not yet known.

Source: Parliamentary documents II 2017/18, 34853, nos. 2 and 3 (Bill introducing Kingdom Act and Explanatory Memorandum)

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