How OECD MAP, APA Statistics Have Evolved in The Netherlands

In the realm of international taxation, the Mutual Agreement Procedure (MAP) serves as a critical mechanism for resolving disputes that arise from the interpretation and application of tax treaties. The OECD’s recent publication of the “Mutual Agreement Procedure (MAP) Statistics per jurisdiction, Netherlands, 2006-2015 (pre-MAP Statistics Reporting Framework) and 2016-2023 (post-MAP Statistics Reporting Framework)” offers a comprehensive look at how the Netherlands has navigated these complex waters over nearly two decades.

The Dutch MAP team coordinates the MAP procedure within the Dutch tax Authorities. If citizens or companies are confronted with double taxation, they can request a MAP procedure if certain conditions are met. The countries involved will then jointly look for a solution to eliminate this double taxation.

Pre-MAP Statistics Reporting Framework (2006-2015)

The period from 2006-2015 marks an era before the implementation of the OECD standardized MAP Statistics Reporting Framework. Key limited data from this era include opening and closing inventory MAP numbers for each year, but also the number of cases initiated and completed (and the number of cases closed and withdrawals) including the average cycle times. During the 2006-2015 period, the Netherlands saw a growing number of MAP cases also in non-OECD country cases, which is illustrative for the growing complexity of international tax issues. The data from this period discloses neither the other countries involved nor the detail of the nature of disputes. The efficiency of the resolution process can be measured via the data for average cycle time for MAP cases to be completed. The 2006-2015 data shows that typically it takes less time to complete OECD compared to non-OECD country MAP cases.

Post-MAP Statistics Reporting Framework (2016-2023)

The introduction of the OECD standardized MAP Statistics Reporting Framework in 2016 marked a significant shift towards greater transparency and consistency in reporting, also in the Netherlands. This OECD format covers the amount(s) of MAP cases closed per year before 2016 and per 2016, whereby the following categories of outcomes are distinguished:

1. denied MAP access, possibly because missed a deadline or due to penalties;
2. objection is not justified;
3. withdrawn by taxpayer, for whatever reason;
4. unilateral relief granted, at a domestic level;
5. resolved via domestic remedy, again at a domestic level;
6. agreement fully eliminating double taxation / fully resolving taxation not in accordance with tax treaty; this is the ultimate desired outcome of any MAP case;
7. agreement partially eliminating double taxation / partially resolving taxation not in accordance with tax treaty;
8. agreement that there is no taxation not in accordance with tax treaty;
9. no agreement including agreement to disagree, for example if there is no binding arbitration clause applicable;
10. any other outcome.

Start to End Times

For all MAP cases post-2015 for the Netherlands, the average time taken tripled and increased from 5.92 months from “start to end” in 2017 in five years time to 16.06 months in 2022.

The average “start to end time” for MAP cases kept increasing in 2023, but the total year end 2023 Dutch MAP inventory is lower than at the beginning of 2023, as per above table. What is also clear and obvious is that relatively speaking, it requires significantly more time to resolve transfer pricing cases compared to other cases as the above table shows. Transfer pricing MAP cases tend to be more complex and time consuming compared to other cases. The Dutch MAP team is ever improving its capabilities, see below for the OECD awards it earned.

The Netherlands MAP Partners Since 2017

With respect to 2016 and prior years, no specifics of countries were published by the OECD. After 2016, the OECD provides data for the most important MAP partners of the Netherlands. These most important MAP partners may vary per year.
With respect to 2017, the most important MAP partners of the Netherlands are Belgium, Curacao, France, Germany, Indonesia, Italy, Spain, Switzerland, the United Kingdom, and the United States. As said, this list of most important MAP partners of the Netherlands varies per year.

By the year 2022, the list of most important MAP partners expanded with five additional countries (Curacao exited), being India,Ireland, Norway, Portugal and Sweden. The 2023 list of most important MAP partners also consisted of Canada, Austria, Denmark, Greece and Romania. Thus, not only the total number of MAPs, but also the number of countries with which the Netherlands has a significant number of MAPs, keeps ever increasing.

In 2023, the Netherlands mainly had transfer pricing MAP cases with Belgium, Canada, Switzerland, Germany, Denmark, Spain, France, the United Kingdom, Indonesia, Italy and Romania as well as with other treaty partners, as the following table shows:

In 2023, the Netherlands mainly had other MAP cases with Austria, Belgium, Switzerland, Germany, Spain, France, United Kingdom, Greece, Indonesia, Norway, Portugal and the United States as well as with other treaty partners, as the following table shows:

The OECD MAP data from 2016-2023 indicates a marked improvement in the effectiveness of the MAP process, albeit that the MAP lead times increased. For the Netherlands, this period has been characterized by enhanced clarity in the types of cases handled, which outcomes achieved, and the timeframes for resolution. The Netherlands has continuously demonstrated a commitment to resolving the increased number of disputes. This progress is a testament to the effectiveness of the OECD’s efforts to streamline the MAP process and the proactive measures taken by Dutch tax authorities. The annual MAP Awards were presented by the OECD on November 15, 2024, during the plenary meeting of the Forum on Tax Administration (FTA). The Dutch MAP team of the Dutch tax authorities has won two awards: for ‘Best Average Time, Transfer Pricing Cases’ and ‘Best Caseload Management, Large Inventory’. Winning the awards is great recognition and appreciation for the Dutch MAP team’s commitment to resolving tax disputes and offering tax certainty to taxpayers. The Netherlands also performed well in the “Other Cases” category being the shortest average time to close non-transfer pricing MAP cases and in the category “Age of Inventory” smallest portion of cases received before January 1, 2016 in end inventory, in %; for both transfer pricing cases and other cases. The Netherlands did not win an OECD award in the last category 6 “APA Award for Focus on Dispute Resolution”.

2023 APA Statistics

In addition to the MAP statistics, the OECD report includes valuable insights into the 2023 Dutch Advance Pricing Agreement (APA) statistics. APAs are agreements between taxpayers and tax authorities on the appropriate transfer pricing methodologies for specific transactions. The Netherlands’ APA statistics for 2023 reflect a proactive approach to seek preventing disputes before they arise. The Dutch APA inventory at the start of the reporting period 2023 was 103 and the end 110, being a slight increase. The 2023 Dutch APA numbers were applications filed: 39, granted: 26, rejected: only 1, but closed for other reasons: 5. The average time taken in months to grant Dutch APAs during 2023 was 34 months, which is almost three years. This period covers both unilateral Dutch and bi- and multilateral APAs. In our experience to complete unilateral APAs in the Netherlands takes one year or even less. We note that an APA cannot be concluded if there is insufficient economic nexus in the Netherlands, the sole or decisive reason for the transaction is to save Dutch or foreign tax and/or a transaction takes place with entities established in countries appearing on the Dutch list of low-taxed and non-cooperative countries.

The above data shows the number of APA requests received, processed, and concluded, illustrating the Netherlands’ dedication to providing certainty and predictability for multinational enterprises. This proactive stance not only helps in mitigating potential disputes but also fosters a more stable and cooperative international tax environment in the Netherlands.

Finally, the “Harmful Tax Practices—OECD 2023 Peer Review Reports on the Exchange of Information on Tax Rulings: Netherlands” (Dec. 16, 2024), showed that the Netherlands has met all aspects of the 2021 OECD terms of reference 2021 with respect to 2023 and no recommendations are made. Also, the OECD received peer input from ten jurisdictions in respect of the exchanges of information on rulings received from the Netherlands. Their input to the OECD was generally positive, noting that overall the Dutch information was complete, in a correct format, and received in a timely manner.

Amount B and Tax Certainty

On December 4, 2024, the Dutch State Secretary of Finance published the new Decree on OECD Pillar One – Amount B. Amount B concerns the contemplated simplified and streamlined transfer pricing rules for determining the remuneration for baseline marketing and distribution activities. This Decree states that Amount B rules will not apply to baseline marketing and distribution activities in the Netherlands. However, the Netherlands commits to accepting the outcome of applying Amount B to baseline marketing and distribution activities in covered jurisdictions. The list of covered jurisdictions is (to be) published and maintained by the OECD. The Netherlands will provide a corresponding adjustment to transfer prices as relief for double taxation if:

1. the covered jurisdiction has implemented Amount B in local laws and regulations,
2. has correctly applied Amount B, and
3. has a bilateral tax treaty with the Netherlands.

The Decree states that the Dutch competent authorities and Dutch Tax Authorities will act in accordance with these conditions. Of particular interest is the statement that the Dutch Amount B Decree will apply not only to affiliated entities (legal entities), but also to the profit allocation to permanent establishments (PEs). It is worth noting that the OECD Amount B Guidance itself has not clarified the applicability to PEs.

Conclusions

The OECD’s 2023 MAP statistics report offers a detailed and insightful look into the evolution of also the tax dispute resolution in the Netherlands. The transition from the pre- to post-standardization periods highlights significant MAP improvements in efficiency and transparency, reflecting the positive impact of the OECD’s MAP initiatives.

As international tax issues continue to grow in complexity (for example Amount B), the importance of effective dispute resolution mechanisms like MAP and APA cannot be overstated.

The Netherlands will not apply Amount B to baseline marketing and distribution activities. The Netherlands is committed to accept the outcome of applying Amount B to baseline marketing and distribution activities in and with covered jurisdictions.

The Netherlands’ experience, as detailed in this OECD report, provides valuable MAP best practices and benchmarks for other jurisdictions striving to enhance their own tax dispute resolution processes. We trust that in the future, the Netherlands will also be able to win an OECD award in the category “APA Award for Focus on Dispute Resolution”. In the OECD Peer Review, the OECD made no recommendations on the exchange of information on Dutch tax rulings and APAs. The continued focus on transparency, efficiency, and proactive prevention of disputes will be key to navigating the future of international taxation.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Eduard Sporken is a Director with Global Transfer Pricing Services at KPMG Meijburg & Co, Netherlands.

The information in this article is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser. This article represents the views of the authors only, and does not necessarily represent the views or professional advice of KPMG Meijburg & Co and KPMG LLP.