Policy decree - ATAD2 and cost-plus situations | Deloitte Netherlands


Policy decree: ATAD2 and cost-plus situations

An updated ATAD2 policy decree published on 3 November 2022 aims to resolve the overkill that follows from the Dutch ATAD2 implementation for specific cost-plus situations.

4 November 2022

Since 1 January 2020 the Dutch rules that implemented the hybrid mismatch measures of the EU Anti-Tax Avoidance Directive (ATAD2) apply. The goal of these hybrid mismatch rules is to neutralize the tax effects of hybrid arrangements that result from, among others, differences in the tax treatment of an entity or an instrument under the laws of two or more EU member states or a member state and a third country. For specific types of hybrid mismatches, the rules provide relief for dual inclusion income. The anti-hybrid rules do not apply to the extent a hybrid deduction reduces an item of income that is included in taxable income at least twice in the involved jurisdictions (e.g., a hybrid entity with a deduction resulting in a deduction without inclusion that also earns income that is taxable in both the entity and the investor jurisdictions). The dual inclusion income exception can be broadened in specific situations based on a policy decree published on 3 November 2022.


During the implementation of ATAD2 in the Netherlands it was noted that the application of the directive can lead to double taxation in certain so-called cost-plus situations, as there is no dual inclusion income. Initially the Dutch legislator was – after consulting the European Commission – of the opinion that it was not possible to solve the risk of double taxation given the wording of the EU Directive. After recent contact with the European Commission, it has been decided that, contrary to the literal text, the deduction limitation can remain inapplicable in certain cost-plus situation in line with the general aim and purposes of ATAD2. Therefore, under specific circumstances it can be concluded there is dual inclusion income in cost-plus situations.

Cost-plus situation

The policy decree describes the following cost-plus situation:

  • NL BV is wholly owned by a company established in the US (M Inc.).
  • NL BV is disregarded for US tax purposes.
  • NL BV incurs 100 costs and receives from M Inc. a fee on a cost-plus basis of 110 for these costs and the services it has provided. The cost-plus renumeration is part of the Dutch tax base of NL BV.
  • M Inc. receives sales proceeds of 130 from an independent third party. The sales proceeds are related to the cost-plus renumeration and are taxed in the US.

As NL BV is disregarded for US tax purposes, the cost-plus renumeration of 110 is not visible from the perspective of M Inc. On the other hand, due to NL BV’s disregarded status, the 100 costs incurred by NL BV are also deducted at the level of M Inc. in the US. As the costs are deducted twice, the situation in principle falls in scope of the anti-hybrid rules. However, application of the anti-hybrid rules would in this case lead to double taxation. It would mean the costs would solely be deductible at the level of M Inc. while there would be twice taxable income (i.e., 130 sales proceeds at the level of M Inc. and 110 cost-plus remuneration at the level of NL BV). Therefore, in the policy decree it is indicated that in this specific situation the cost-plus remuneration can be regarded as dual inclusion income. In this regard it is explicitly mentioned that the cost-plus remuneration should be part of the Dutch tax base of NL BV and the remuneration should not be directly or indirectly deductible in any country.


The position as described in the policy decree applies to financial years that commenced on or after 1 January 2020, which entails it materially has retroactive effect. Tax assessments that have meanwhile been finalised may be reduced ex officio.

Source: Decree of 31 October 2022, nr. 2022-23956 (published on 3 November 2022).

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