The Dutch Lower House has adopted the Multilateral Instrument (“MLI”) ratification bill including the choices and reservations made by the Netherlands regarding the MLI.

A motion to opt out of the anti-commissionaire provision was passed as well. The Netherlands will therefore make a full reservation on article 12 MLI. Article 12 MLI aims to target the artificial avoidance of a permanent establishment in case of inter alia commissionaire structures. Under article 12 MLI, the scope of the permanent establishment provision is broadened. The full reservation on article 12 MLI may be withdrawn by filing a legislative proposal in 2020 provided that there is clear policy on the profit allocation to agency permanent establishments and that an effective dispute resolution mechanism with sufficient MLI partners will be in place.

To finalize the ratification procedure of the MLI in the Netherlands, the bill must also be adopted by the Dutch Senate. Based on the currently expected timing, the MLI will likely become effective as from 1 January 2020. Upon ratification of the MLI by both the Netherlands and the relevant tax treaty partners, the 82 listed tax treaties may be affected by the provisions of the MLI.

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