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The Netherlands publishes a draft legislative proposal for consultation to implement the GloBE Model Rules in the Dutch Minimum Tax Act 2024

In brief

On 24 October 2022, the Netherlands published an extensive draft proposal, including detailed commentary, for the implementation of the GloBE Model Rules in Dutch tax legislation. The Dutch Pillar 2 Proposal is presented as a stand-alone legislative act referred to as the “Minimum Tax Act 2024” (“MTA 2024”), which would exist separate from the Dutch corporate income tax act.

The MTA 2024 is largely based on the EU Pillar 2 Directive that was published on 22 December 2021 (“EU Directive“) and further updated in subsequent months. More information on the original EU Directive can be found here.

In detail

The EU Directive aims to implement the OECD GloBE Model Rules in a coherent and consistent way throughout all EU member states, requiring unanimous agreement for it to be approved. As no unanimous agreement has been reached yet within the EU, the Netherlands decided to proceed with the issuance of the MTA 2024 mainly to obtain feedback and input from taxpayers. The Dutch government shared a few key considerations for choosing this path, being:

(i) it believes that the EU Pillar 2 Directive will not undergo significant changes as it is generally based on the OECD GloBE Model Rules (to which an agreement was already reached within the Inclusive Framework), and

(ii) with the aim for 2024 implementation, it acknowledges that taxpayers and administration will need sufficient time to understand the MTA 2024 due to its complexity.

The Dutch government stresses that it continues to favor reaching an agreement within the EU and adopting the GloBE Model Rules through an agreed EU Directive. Therefore, the Dutch Government acknowledges that this version of the MTA 2024 might be subject to further change and be different from the final MTA 2024 ultimately to be submitted.

This alert addresses some of the highlights from the MTA 2024 and as we further dive into the detail, we would be happy to discuss this further with you.

1. Framework


The scope of the MTA 2024 is generally in line with the OECD GloBE Model Rules and the EU Directive. The MTA 2024 applies to members of multinational groups (“MNE Group(s)“) and, in line with the EU Directive, to large-scale but purely domestic groups in the Netherlands with an annual consolidated revenue of at least EUR 750 million. This threshold should be met in at least two of the four preceding fiscal years. In line with the OECD GloBE Model Rules and the EU Directive, certain entities (such as investment funds) are excluded from the scope of the MTA 2024 due to their nature of activities. Other entities may become out of scope from the MTA 2024 under a de-minimis exception.


The starting point of the MTA 2024 is the calculation of the effective tax rate (“ETR“) in a jurisdiction. Consistent with the OECD GloBE Model Rules and the EU Directive, the ETR is equal to (i) the Covered Taxes of a jurisdiction in the numerator divided by (ii) the GloBE Income (or Loss) of a jurisdiction in the denominator. If this calculation results in an ETR lower than 15% at jurisdictional level, that jurisdiction will be considered low-taxed. For the calculation, in principle the accounting standards of the Ultimate Parent Entity (“UPE“) need to be applied, however where not reasonably practicable to apply the financial accounting standard of the UPE, the MTA 2024 allows for the use of another acceptable financial accounting standard or an authorized financial accounting standard provided that certain conditions are met.

Covered Taxes

The starting point of the calculation is the total tax charge for accounting purposes. Uncertain tax positions are not taken into account. CFC charges and withholding taxes are allocated to the entity which has the underlying profits. No reference is made to what qualifies as a “CFC tax”, so an important question for US MNEs around the qualification of GILTI remains unanswered. There are specific rules dealing with transparent entities to ensure GloBE Income and Covered Taxes are matched up and allocated to the same jurisdiction.

GloBE Income

Generally, the starting point for the calculation of the GloBE Income or Loss is the net financial accounting income or loss (before the elimination of intra-group transactions) as depicted in the consolidated financial statements of the MNE Group. The MTA 2024 then provides for various adjustments in order to account for certain differences between the accounting base and GloBE Income/Loss base. These adjustments are generally in line with the EU Directive and the OECD GloBE Model Rules.

It is worth mentioning that there are some deviations between the OECD GloBE Model Rules, the EU Directive and the MTA 2024 that may affect the outcome of the Pillar 2 ETR test.

One example relates to the Dutch participation exemption. The Dutch participation exemption is applicable if, simply put, a Dutch taxpayer holds at least 5% of the shares in a subsidiary and if certain specific conditions are met. Profit distributions and capital gains are exempt from Dutch corporate income tax if the Dutch participation exemption applies. The MTA 2024 also requires certain adjustments with respect to profit distributions and capital gains to get to the GloBE Income (or Loss). However, in line with the OECD GloBE Model Rules and the EU Directive, a distinction is made between shareholdings of less than 10% and shareholdings of 10% and more. Profit distributions and capital gains from shareholdings of less than 10% which are held for less than one year are not adjusted in the GloBE Income (or Loss). However, if a shareholding of less than 10% is held for at least one year or if the participation in the shareholding is at least 10%, adjustments should be made with respect to profit distributions and capital gains in order to derive the GloBE Income (or Loss), i.e. these should be excluded in the GloBE Income (or Loss).

Another example relates to Dutch tax regimes that may lower the Dutch corporate income tax – and consequently impact the jurisdictional Covered Taxes – such as the Innovation Box, the Tonnage Regime and the Dutch Liquidation Loss Regime. Depending on the circumstances, the income related to these regimes may nevertheless be part of the GloBE Income (or Loss) (i.e. no corresponding adjustment is provided for the GloBE Income (or Loss) calculation). This essentially increases the denominator resulting in a decrease of the ETR.

We expect that more examples will be raised during the consultation (e.g. the impact of the arm’s length correction in place as of 1 January 2022).

Top-up Tax

Domestic Top-up Tax

Once it has been determined that a jurisdiction is low-taxed, the difference between the ETR and the minimum tax of 15% will need to be charged by means of a Top-up Tax. Again, consistent with the OECD GloBE Model Rules and the EU Directive, the so-called substance carve-out (a formula based on an initial mark-up of 10% on payroll costs and 8% on the book value of certain tangible fixed assets) may effectively reduce the amount of Top-up Tax due.

In principle, the Top-up Tax is charged via the Income Inclusion Rule (“IIR“) and in some cases as a backstop based on the Undertaxed Profit Rule (“UTPR“) mechanisms. However, based on the OECD GloBE Model Rules and the EU Directive, jurisdictions are offered the choice to implement a Qualified Domestic Minimum Top-Up Tax (“QDMTT“) that enables jurisdictions to charge and collect any Top-up Tax arising in their own jurisdictions. The QDMTT therefor prevents other jurisdictions to charge Top-up Taxes with respect to low-taxed jurisdictions. The Netherlands opted for this QDMTT in the MTA 2024.


The IIR functions as a primary rule and is – under the top-down approach – first applied at the level of the UPE of a MNE Group. Where that UPE does not apply an IIR, intermediate holding jurisdictions where the GloBE Model Rules or EU Directive is implemented will apply the IIR. Hence, the Netherlands would apply the IIR either if it is the UPE or if it is an intermediate holding company jurisdiction where no (in)direct parent has implemented the IIR. In addition, the MTA 2024 prescribes that the IIR is also applicable with respect to low-taxed large-scale domestic groups located in the Netherlands.

In cases where the IIR cannot be (fully) applied, the UTPR kicks in as secondary rule or “backstop” to impose the Top-Up Tax to a group entity (e.g. the UPE in a country that did not implement the GloBE Model Rules). The UTPR is set to enter into force one year later than the QDMTT and IIR.

Under the EU Directive and the OECD GloBE Model Rules, jurisdictions may opt to impose a Top-Up Tax under the UTPR through the denial of a deduction or an equivalent adjustment under domestic law. In the MTA 2024, the Netherlands has opted for the use of the UTPR in the form of an additional charge or equivalent adjustment, not as a deduction of payments, in order to minimize any connection with the Dutch corporate income tax act. For purposes of calculating the UTPR charge, undertaxed profits are allocated to the Netherlands by using an ‘allocation key’ based on the Dutch share of employees and the Dutch share of tangible assets, weighted on a 50:50 basis (this is consistent with the formula in the GloBE Model Rules and EU Directive).

2. Dutch implementation

Administrative provisions

The MTA 2024 also contains certain provisions that are specifically related to the implementation of the rules in the Netherlands:

  1. Taxes levied on the basis of the MTA 2024 are in essence different from “ordinary” corporate income taxes since Pillar 2 taxes will not be levied by assessment (“aanslagbelasting”) but by tax return (“aangiftebelasting”). The relevance is that corrections can be made by the Dutch tax authorities with lower standards than in the case of an “assessment tax”.
  2. The MTA 2024 sets the deadline to file a disclosing information return (if applicable) within fifteen months after the end of the financial year (identifying the relevant entities of the MNE group, the group structure and relevant information that is needed to determine the ETR of the entities of the MNE group etc.).
  3. The Top-up Tax due in a fiscal period (either by way of the QDMTT, IIR, or UTPR) should be declared via an annual tax return. The filing deadline for this tax return is two months after the filing of the information return which should contain detailed information about the application of GloBE Model Rules within the group, especially where the Netherlands entity is the UPE or if the UPE is not applying Pillar 2. The information return is typically due fifteen months after the end of the fiscal year, so with the additional two months the actual tax return is due seventeen months after the end of the fiscal year. For the first tax return this deadline has been set at twenty months after the end of the fiscal year ending on or after 31 December 2023.
  4. Fines may be imposed in case of an intentional act or gross negligence related to the non-filing, late filing or incorrect filing of the disclosing information return (up to EUR 900.000).

Transitional Rules

The MTA 2024 includes transitional rules that are generally in line with the OECD GloBE Model Rules and EU Directive. The key transitional rules relate to asset transactions within the MNE Group and deferred tax assets. Effectively this means that in case of an asset transfer within the MNE Group between 30 November 2021 and the year in which the MTA 2024 comes into effect, any step up in value will be ignored (and the book value of the transferor has to be applied) for purposes of the GloBE calculation, including the deferred tax assets related to the book value. Moreover, deferred tax assets that relate to items that are excluded from the GloBE Income (or Loss) and that arise as a result of a transaction between 30 November 2021 and the year in which the MTA 2024 comes into effect, are excluded from the calculation of Covered Taxes. 

Final comments

The MTA 2024 aims to implement the IIR and the QDMTT for MNE Groups that have financial years starting on or after 31 December 2023. The UTPR, on the other hand, is envisaged to be implemented for MNE Groups that have financial years starting on or after 31 December 2024. Considering that the MTA 2024 is very technical of nature, we expect that the consultation will attract significant feedback to further crystalize the MTA 2024 and the extensive commentary.

Even though the existence of certain Dutch provisions may lower the ETR in the Netherlands, the Dutch Government believes that generally the ETR of Dutch taxpayers should be higher than 15% due to the statutory corporate income tax rate of 25.8% (in 2022).

The consultation of the MTA 2024 will close on 5 December 2022. Baker McKenzie is closely monitoring all related developments and our team of policy experts is ready to discuss the impact of the MTA 2024 (and the GloBE Model Rules in general) on your structure.

For more information on this subject, reference is made to our earlier alerts on this subject:

International Tax: Pillar Two – Model Global Minimum Tax Regime Reveal – Baker McKenzie InsightPlus

International: OECD publishes the long-awaited commentary to model Gl – Baker McKenzie InsightPlus

EU: No unanimous consensus in today’s ECO FIN Council meeting to appr – Baker McKenzie InsightPlus


Mounia Benabdallah is a principal in Baker McKenzie’s International Tax Practice Group. She joined Baker McKenzie in 2006 and has practiced in the Firm’s offices in Amsterdam, Chicago and New York. As an attorney at law she is admitted to the Netherlands Bar. Mounia is repeatedly recognized as leading advisor in ITR’s Women in Tax Leaders guide. Because of her strong US focus, Mounia is based in New York and member of the Global Reorganizations Practice Group. Mounia mainly advises US multinationals on the interplay between US international tax law, European tax law and Netherlands tax law in global restructuring projects, with a strong focus on global (OECD BEPS) and European tax policy developments.


Narine Movsisian is a senior associate in Baker McKenzie's Tax Practice Group.

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