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May 31, 2023

The Netherlands issues proposed Pillar Two legislation

  • The Dutch Government has sent to Parliament a legislative proposal for the domestic implementation of the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) 2.0 Pillar Two agreement.
  • The legislative proposal is based on the text of the European Union (EU) Directive dated 14 December 2022, introduces a Qualified Domestic Minimum Top-up Tax (QDMT), and contains the Safe Harbor rules.

Executive summary

On 31 May 2023, the Dutch Government sent to Parliament draft legislation to implement the BEPS 2.0 – Pillar Two global agreement in its domestic legislation. The draft legislation follows the draft legislative proposal released on 24 October 2022 as part of a public consultation process. The legislative proposal is structured as a separate tax law that is not intended to be embedded into the existing Dutch Corporate Income Tax Code.

The Dutch proposal is based on the EU Directive dated 14 December 2022to implement the OECD Pillar Two agreement within the EU. EU Member States have until 31 December 2023 to transpose the Directive into national legislation.


Pillar Two will introduce a 15% global minimum effective tax rate for in-scope businesses and primarily consists of two interlocking domestic rules, the Income Inclusion Rule (IIR) and Undertaxed Payment Rule (UTPR), which together are referred to as the Global Anti-Base Erosion (GloBE) rules.

In line with the EU Directive, the Dutch Government proposes that the IIR and the UTPR become effective for financial reporting years starting on or after 31 December 2023 and 31 December 2024 (respectively).

Notably, and in line with the draft published during the consultation process, the Dutch Government also makes use of an option provided by the EU Directive to propose the introduction of a QDMTsuch that – essentially – the Dutch Government will collect top-up tax allocable to the excess profit of Dutch constituent entities that are part of in-scope multinational groups. The draft legislation also introduces a domestic IIR.

The legislative proposal contains Safe Harbor rules in line with the guidance released by the OECD/G20 Inclusive Framework on 15 December 2022. Besides this, the legislation acknowledges that the OECD may issue further guidance to the OECD model rules in later stages, and that this may be reflected in later Dutch legislation or regulations.

Timing and next steps

The EU Directive must be transposed into national legislation by 31 December 2023. The submission of the bill to Parliament is the first step to effectuate this result. The legislation is still subject to parliamentary discussions.

A more detailed Tax Alert outlining the tax technical aspects of the proposed legislation will follow, as well as other communications as the legislative process progresses.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Belastingadviseurs LLP, International Tax and Transaction Services, Amsterdam

Ernst & Young Belastingadviseurs LLP, International Tax and Transaction Services, Rotterdam

Ernst & Young LLP (United States), Netherlands Tax Desk, New York

Ernst & Young LLP (United States), Netherlands Tax Desk, Chicago

Ernst & Young LLP (United States), Netherlands Tax Desk, San Jose/San Francisco

Ernst & Young Tax Services Limited (Hong Kong), Netherlands Tax Desk, Hong Kong

Ernst & Young (China) Advisory Limited (China Mainland), Netherlands/EMEA Tax Desk, Shanghai

Ernst & Young (China) Advisory Limited (China Mainland), Netherlands/EMEA Tax Desk, Beijing

EY Corporate Advisors Pte Ltd (Singapore), Netherlands/EMEA Tax Desk, Singapore

Ernst & Young LLP (United Kingdom), Netherlands Tax Desk, London

Ernst & Young Tax Co (Japan), Netherlands/EMEA Tax Desk, Tokyo

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor