International tax law

International tax law

International tax law governs the levying of tax in cross-border situations. Treaties regulate the rules regarding the levying of international tax. This is intended to prevent double taxation by different countries. If a country is not a party to one of the treaties concluded by the Netherlands, recourse may be had to the unilateral arrangement under the Double Taxation Avoidance Decree.

In addition to international treaties, a treaty has also been concluded within the European Union regarding the taxation of income, assets, and profits. Furthermore, the European Union has drafted a directive concerning the levying of VAT (Value Added Tax). Our tax specialists and lawyers have experience in international tax law and are therefore happy to provide tax and legal advice.

Questions regarding international tax law? Contact us.

Prevention of double taxation and tax treaties

At the heart of international tax law is the question of which country has the right to levy taxes. The Netherlands has concluded bilateral tax treaties with many countries that divide the right to tax income, profits, and assets. If no treaty exists, the Double Taxation Avoidance Decree 2001 offers a unilateral arrangement. Double taxation is prevented via the exemption method or the credit method. In practice, it revolves around the correct allocation of income to the state of residence or the state of source, and the correct application of the treaty to your specific situation. Our tax specialists and lawyers assess which treaty applies and how you can demonstrably prevent double taxation.

Permanent establishment and foreign activities

Anyone doing business across borders will soon encounter the concept of a permanent establishment. A permanent establishment (for example, a branch, factory, or building) or a permanent representative can result in another country being entitled to levy tax on profits earned there. Uncertainty regarding this regularly leads to disputes with the Dutch Tax and Customs Administration or foreign tax authorities, and sometimes to double taxation due to a hybrid assessment. We assess whether a permanent establishment exists, how profits are attributed to it, and which structure (branch or subsidiary) is the most sensible from a tax perspective.

Transfer pricing and the arm's-length principle

Within an international group, intercompany transactions must take place at arm's length prices, as if they involved independent parties. This arm's-length principle is laid down in Section 8b of the Corporate Income Tax Act 1969 and elaborated in the OECD Transfer Pricing Guidelines and the Dutch Transfer Pricing Decree. Furthermore, for larger structures, documentation obligations apply (master file, local file, and potentially country-by-country reporting). Good transfer pricing documentation prevents adjustments, penalties, and double taxation. We draft transfer pricing policies, review existing agreements, and assist you in discussions with the tax authorities.

Working internationally: 30% ruling and emigration

Not only international corporations, but also smaller entrepreneurs and employers with foreign personnel are confronted with international tax law. For incoming employees, the expat scheme (the 30% ruling) may apply under certain conditions, allowing a portion of the salary to be reimbursed tax-free; the application must be submitted within four months of the start of employment. In addition, questions arise regarding emigration and immigration, a person's domicile or a company's place of establishment, exit taxes upon leaving the Netherlands, and international social security. We advise employers, director-major shareholders, and private individuals on the tax implications of cross-border living and working.

International structures, withholding tax and restructuring

In international holding structures, mergers and acquisitions, and restructurings, the focus is on an efficient and sustainable tax setup. This involves, among other things, dividend tax, the Withholding Tax Act 2021 on interest and royalties, the participation exemption, and the implications of EU directives and international measures against profit shifting (BEPS, ATAD, and Pillar 2). For those seeking certainty in advance, consultation with the Tax and Customs Administration is possible via an Advance Tax Ruling (ATR) or Advance Pricing Agreement (APA). We assist in setting up and reviewing structures that are not only tax-advantageous but also legally defensible.

Disputes with the Tax and Customs Administration and foreign tax authorities

If an international matter results in a correction, additional assessment, or penalty, our lawyers and tax specialists will assist you in objection and appeal proceedings. In the case of treaty countries, a Mutual Agreement Procedure (MAP) or EU arbitration can also be initiated to eliminate double taxation. Read more about objections and appeals and about tax penalties.

International tax law within our tax law team

International tax law is part of our broader expertise in Tax Law. At MKB Juristen, lawyers and in-house counsel work together in mixed teams, ensuring that tax and legal knowledge go hand in hand. In doing so, we serve both international corporations and small business owners, from SMEs with foreign clients to the baker on the corner hiring staff from abroad. To determine the appropriate legal structure, we also consider your choice of legal form and, for cross-border transactions, VAT.

Frequently asked questions about international tax law

What does an international tax law attorney or legal professional do?

An international tax lawyer or legal expert advises on the tax consequences of cross-border activities, prevents double taxation, assesses treaties and permanent establishments, and assists you in disputes with the Dutch Tax and Customs Administration or foreign tax authorities.

How is double taxation prevented?

Double taxation is prevented through tax treaties or, in the absence thereof, through the Double Taxation Prevention Decree 2001. Depending on the income, the exemption method or the credit method applies.

What is a permanent establishment?

A permanent establishment is a fixed place of business from which an enterprise is conducted wholly or partly in another country, such as a branch or factory. Its existence determines whether another country may levy tax on the profits earned there.

Does international tax law also apply to SMEs?

Yes. Even an SME with foreign customers, suppliers, or employees has to deal with VAT, the 30% ruling, social security, and treaty application. We assist both large corporations and small entrepreneurs.