Pillar 2 Dashboard: The Netherlands

On September 16, 2025, the Netherlands Cabinet issued a Draft Bill for the Second Amendment to the Minimum Tax Act to implement the June 2024 and January 2025 OECD Administrative Guidance (as well as the EU DAC 9 proposals).

The Dutch Minimum Tax Executive Decree 2024 was published in the Government Gazette on December 23, 2024. This Executive Decree incorporates various parts of the OECD Administrative Guidance into Dutch law, and provides additional detail where the main Minimum Tax Act stated that further detailed rules would be provided (eg for Blended CFC regimes and substitute loss carry forwards). The Decree enters into force on January 1, 2025 and has retroactive effect to December 31, 2023.

On September 17, 2024, a draft law to amend the Minimum Tax Act was published. This includes a number of amendments to implement the OECD Administrative Guidance. On October 3, 2024, a further amendment to the draft law was published. The draft law was approved by Parliament on December 17, 2024.

On December 27, 2023, the Dutch Official Gazette published the 2024 Tax Plan which includes the Minimum Tax Act to implement the EU Minimum Tax Directive.

On December 19, 2023, the Dutch Senate approved the 2024 Tax Plan which includes the Minimum Tax Act to implement the EU Minimum Tax Directive.

On 13 October 2023, the Dutch State-Secretary of Finance issued a Bill to amend the Dutch Draft Minimum Tax Bill.

The Netherlands presented the Minimum Tax Bill, 2024 to Parliament on May 31, 2023.

The Netherlands has taken the same approach as the UK, and rather than trying to include the GloBE rules as part of the corporate income tax law, the GloBE rules are to be enacted separately.

This is given the significant difference in the approach to calculating Pillar Two top-up tax, with corporate income tax based on taxable income, and GloBE income based on financial reporting income (subject to various GloBE adjustments).

General

The Minimum Tax Act implements an Income Inclusion Rule and a Domestic Minimum Tax (intended to be a Qualified Domestic Minimum Top-Up Tax) for financial years commencing on or after December 31, 2023. An Under-Taxed Profits Rule applies for financial years commencing on or after December 31, 2024.

As provided under the EU Minimum Tax Directive it applies to both multinational and wholly domestic in-scope MNE groups. Domestic groups are groups whose entities are all domiciled in the Netherlands.

The Commentary to the Bill notes that it will affect approximately 3,000 multinational groups and domestic groups.

BES Islands

The GloBE rules will also apply to the three special municipalities of the Netherlands, Bonaire, Sint Eustatius and Saba, also known as the BES islands (formerly known as the Dutch Carribean). 

The BES Islands do not levy corporate income tax, and therefore in-scope entities established there would be subject to the Pillar Two Rules.

In practice, this would mean that the Netherlands could apply the domestic minimum top-up tax to low-taxed income. 

Article 1.3 of the BES Tax Act is amended so that the Dutch legislation will apply to the BES Islands.

Income Inclusion Rule (IIR)

The IIR applies not only to low-taxed group entities resident in a state other than the parent entity, but also to the low-taxed parent entity itself as well as its low-taxed group entities resident in the same state.

Therefore, the IIR also applies to domestic entities. This is to comply with EU law.

However, in practice the IIR will rarely apply to a Dutch parent entity in respect of its low-taxed Dutch subsidiaries as the QDMTT takes precedence over the IIR.

Under-Taxed Profits Rule (UTPR)

The OECD Model Rules provide jurisdictions with flexibility as to the mechanism used to implement the UTPR.  The Netherlands has opted to apply this as a separate tax (as opposed to a denial of a tax deduction or deemed income).

Participation Exemption

As provided in the OECD Model Rules, excluded dividends are dividends from an equity interest that is a portfolio interest (<10% of the profit rights, capital interests, reserves or voting rights) held for one year or more or from an equity interest that is not a portfolio interest.

This is not consistent with the participation exemption in the 1969 Corporate Income Tax Act (“1969 Act”).

In general, this applies an exemption to a participation where a taxpayer holds a >5% interest in the nominal paid-up capital of another company. The holding period is not relevant.

Liquidation Loss Regime

Under domestic law, in certain circumstances, liquidation losses on participations can be taken into account for corporate income tax purposes when determining taxable profits.

Under the Minimum Tax Act, liquidation losses from a non-portfolio interest are not deductible. This can lead to a reduction in the GloBE ETR.

International Shipping

The definition of “international shipping” in the Minimum Tax Act follows the definition in the OECD Model Convention. This definition is narrower than the definition of “profits from shipping” for income and corporate tax purposes.

Administrative Guidance

Aspects of the First Set of OECD Administrative Guidance included in the Minimum Tax Act are:

– The deemed consolidation rules (Article 1.2)

– The exclusion of sovereign wealth funds from the definition of Ultimate Parent Entity (Article 1.4)

– Meaning of “ancillary” for Non-Profit Organisations (Article 1.6)

– The foreign exchange hedge election (Article 2.2)

 – Excluded Dividends – Asymmetric treatment of dividends and distributions (Article 2.3)

– The debt release election (Article 2.4)

-Excess Negative Tax Carry-forward guidance (Article 2.7)

-Substitute Loss carry forwards (Article 2.8)

– The equity gain or loss inclusion election (Article 2.9)

-Allocation of taxes arising under a Blended CFC Tax Regimes (Article 2.10)

– Application of Taxable Distribution Method Election to Insurance Investment Entities (Article 3.1)

– The exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity (Article 3.2)

– Portfolio shareholding election (Article 3.5)

Simplification for Short-term Portfolio Shareholdings (Article 3.5)

– Application of tax transparency election to mutual insurance companies (Article 3.6)

– Asset carrying value and deferred taxes under Transitional Rules (Article 4.3)

The December 2024 Amending Law includes a number of aspects of the OECD Administrative Guidance, including:

-Rebasing monetary thresholds in the GloBE Rules/Currency Conversion Rules (Article 1.1, AG1, AG2)

-Further rules on Excess Negative Tax Carry-forwards (Article 2.7, AG1)

-Tax Credits Guidance (MTTCs) (Article 2, AG2)

-SBIE – Foreign Rules (Article 3, AG2)

-SBIE – Operating Leases (Article 3, AG2)

-Transitional CbCR Safe Harbour Adjustments (AG3)

It should be noted that the Minimum Tax Act provided that some detailed rules were to be issued to regulate certain aspects of the OECD Administrative Guidance. This includes:

-Article 6.2 (3) – The Equity Inclusion Investment election

-Article 6.2(4) – The Forex Hedge Election

-Article 7.2(6) – The Excess Negative Tax Carry-Forward Election

-Article 7.5(10) – Blended CFC Regimes

-Article 8.13(7) – The Switch Off rules for the QDMTT Safe Harbour

-Article 14.1(6) – Further Deferred Tax Transition Rules

The Executive Regulations 2024, published on December 23, 2024, includes further implementation provisions for each of these.

Other aspects of the Administrative Guidance are not included in the Minimum Tax Act but are included in the accompanying Commentary.

For instance:

– A financial instrument issued by one group entity and held by another group entity should be classified as either debt or equity with both entities. To the extent that the instrument is classified differently under the applicable financial reporting standard between the issuing group entity and the group entity holding the instrument, the latter group entity should adopt the classification of the issuing group entity (Article 2.3 of the OECD Administrative Guidance).

– For compound financial instruments, only amounts received or allocated that are related to the equity component can be classified as an excluded dividend (Article 2.3 of the OECD Administrative Guidance).

September 2025 Draft Law

The September 2025 Draft Law includes a number of aspects of the December 2023, June 2024 and January 2025 OECD Administrative Guidance, including:

December 2023 OECD Administrative Guidance

A key change relates to Article 3.3 of the December 2023 Administrative Guidelines.

This states that if a non-consolidated group entity has a different reporting year than the ultimate parent entity, the effective tax rate is calculated based on the financial reporting period that ends during the reporting year of the ultimate parent entity.

This is included in the September 2025 Draft Law in an amended Section 6.1 and will apply to reporting years commencing on or after December 31, 2025.

June 2024 OECD Administrative Guidance

The draft law includes a number of amendments and additions arising from the June 2024 OECD Administrative Guidance. The list below shows an overview of the provisions. Most of the amendments are retrospective and apply from December 31, 2023.

• Aggregate Deferred Tax Liabilities Category basis (Article 1.2.1) – rules to be issued

• Exclusion of certain types of General Ledger accounts and separate tracking (Article 1.2.1) – rules to be issued

• Exclusion of General Ledger accounts that generate standalone Deferred Tax Assets (Article 1.2.1) – rules to be issued

• Exclusion of swinging accounts and separate tracking (Article 1.2.1) – rules to be issued

• FIFO/LIFO Basis (Article 1.2.2) – rules to be issued

• Aggregation of Short-term DTLs (Article 1.2.3) – rules to be issued

• Reversal of DTLs that accrued before the Transition Year (Article 1.2.2) – rules to be issued

• 5 year unclaimed accrual election (Article 1.2.2) – rules to be issued

• Recalculated deferred tax where GloBE carrying value differs from accounting carrying value (Article 2.1.2 NB applies to reporting years beginning on or after December 31, 2025)

• Rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps (Article 3.1.3) – Rules to be issued

• Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and reverse hybrids (Article 4.1) – Rules to be issued

• Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Reverse Hybrids (Article 4.2.2) – Rules to be issued

• Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules (Article 4.2.3) – Rules to be issued

• Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity (Article 5.2.2)

• Non-group owners: Partially owned Flow-through Entities (Article 5.3.2)

• Non-group owners: Indirect minority ownership (Article 5.3.5)

• Taxes allocated to a flow-through entity (Article 5.4.2)

• Hybrid entities – Taxes pushed down include indirect owners (Article 5.4.2)

• Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system (Article 5.5.4)

• Extension of taxes pushed down to include Reverse Hybrids (Article 5.6.2)

Note that an amendment to Section 6.6a applies to impairments. It provides that an impairment in general has no impact on the book value of the assets and liabilities used for GMT purposes. However, if the impairment leads to a carrying amount for financial reporting purposes that is lower than the GloBE carrying amount, the lower book value should be used for GloBE purposes. This applies to reporting years beginning on or after December 31, 2025.

January 2025 OECD Administrative Guidance

The amended Section 14.1 of the draft law includes the deferred tax recognition amendments to Articles 9.1 of the GloBE Rules in the January 2025 OECD Administrative Guidance (including the grace period for DTA reversals). The consequential amendments to the Transitional CbCR Harbour (Section 8.8) are also included. These apply to reporting years commencing on or after December 31, 2025.

Safe Harbours

The Minimum Tax Act reflects the provisions of the OECD Safe Harbour and Transitional Penalty Regime Guidance.

Article 8.8 applies the Transitional CbC Safe Harbour with no significant deviations from the original OECD Safe Harbour Guidance. The December 2024 Amending Law includes provisions to implement aspects of the December 2023 OECD Administrative Guidance, including:

-Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) (Article 8.8(12) states that rules will be provided for these)

-Using different accounting standards

-MNEs not required to file CbC Reports

-Treatment of hybrid arbitrage arrangements

Amended Section 8.8(6) in the September 2025 Draft Law also applies the Rules in Article 2.3.3 of the December 2023 OECD Administrative Guidance relating to adjustments to Qualified Financial Statements/Dividend Mismatches for the Transitional CbCR Safe Harbour. This also applies to reporting years commencing on or after December 31, 2025.

Article 8.11 includes the broad scope for the Permanent Simplified Calculation Safe Harbour, as provided by the OECD.

The NMCE Safe Harbour is to be provided by rules drawn up under an Order in Council.

Articles 8.13 and 8.14 include the QDMTT Safe Harbour and the Transitional UTPR Safe Harbour.

The December 2023 Executive Decree includes further provisions on the Consistency Standard and the Switch-Off rule for the QDMTT Safe Harbour.

In particular, the Decree specifies that the Switch-Off rule applies where:

– A QDMTT jurisdiction does not impose a QDMTT on Flow-through Entities created in its jurisdiction;

– A QDMTT jurisdiction does not impose a QDMTT on Investment Entities subject to Articles 7.4, 7.5, and 7.6 of the GloBE Rules (Provisions for the Effective Tax Rate Computation for Investment Entities, Investment Entity Tax Transparency Election, or the Taxable Distribution Method Election);

– A QDMTT jurisdiction applies the UTPR exclusion for MNEs in their initial phase of international activity without any limitation;

– A stateless entity is not subject to a QDMTT in the State in which it is incorporated;

– A QDMTT jurisdiction includes members of a JV Group (which includes Joint Ventures) within the scope of the QDMTT but imposes the liability on Constituent Entities of the main group instead of directly on the members of the JV Group.

Elections

The Act includes all of the key elections as provided in the OECD Model Rules, including:

– Excluded Entity Election (Section 2.2(4) of the Act)

– Election to use the Realization Method (Section 6.6 of the Act)

– Stock-Based Compensation Election (Section 6.3 of the Act)

– Election to Spread Capital Gains (Section 6.7 of the Act)

– Consolidation Election (Section 6.9 of the Act)

– GloBE Loss Election (Section 7.4(1) of the Act)

– Tax Transparency Election (Section 10.5 of the Act)

– Taxable distribution Election (Section 10.6 of the Act)

– Unclaimed Accrual Election (Section 7.3(9) of the Act)

– Distribution Tax Regime Election (Section 10.3(1) of the Act)

– Substance-Based Income Exclusion Election (Section 8.2(3) of the Act)

– Prior Year Adjustment Election (Section 7.6 of the Act)

– Deemed Disposal of Assets (Section 9.3(4) of the Act)

– Transitional Safe Harbour Election (Section 8.8 of the Act)

– De minimis Election (Section 8.7(1) of the Act)

The Act and Executive Decree also includes also includes the elections from the OECD Administrative Guidance, including:

– Portfolio Shareholding Election (Section 6.2(5) of the Act);

– Foreign Exchange Hedge Election (Section 6.2(4) of the Act);

– Debt Release Election (Section 6.2(1) of the Act)

-Equity Gain or loss inclusion election (Section 6.2 of the Act)

– Excess Negative Tax Carry-Forward Election (Section 7.2(6) of the Act)

Differences to Model Rules

The Dutch legislation is very similar to the EU draft directive. This results in minor differences from the OECD Model Rules, which is to be expected as domestic legislation needs to take account of the particular tax and legal system of the implementing jurisdiction. 

For instance, under Article 10 of the Model GloBE Rules, one of the criteria for a non-profit organisation is that it has no shareholders or members who have a proprietary or beneficial interest in its income or assets. 

Under the Dutch legislation this is changed to having ‘no shareholders or members who have any ownership or right of have usufruct on its income or assets.’ This arises from the fact that the Netherlands has a civil law system and not a common law system. As such, the concept of beneficial interest is replaced with an ursufruct. 

Whilst the EU Minimum Tax Directive largely represents a direct transposition of the OECD GloBE Model Rules, it does include a number of amendments to ensure compatibility with EU law or to progress operational matters not yet addressed at the OECD.

The main additional provisions in the Directive are:

– Extension of Pillar Two to include large scale, purely domestic groups. This is so as not to contravene the EU fundamental freedoms. It is expected that this extension will primarily be of relevance to larger Member States, where there is greater scope to have domestic-only groups that meet the €750m threshold.

– The Directive makes it mandatory for Member States to apply the IIR and UTPR. By contrast, jurisdictions could sign up to the OECD agreement on the basis that they themselves would not implement the top-up tax domestically, but would not object to its application on companies within their borders by other jurisdictions.

– Requirement for a Member State of a constituent entity applying the IIR to apply it not only to foreign subsidiaries but also to all constituent entities resident in that Member State. This is permitted but not mandatory under the GloBE Model Rules.

The OECD Model Rules provide that the rate for calculating the amount of Substance-Based Income Exclusion (‘SBIE’) is 5%. However, under transitional rules the rates are initially 10% for the payroll carve-out and 8% for the tangible asset carve-out. These will be reduced annually over 10 years to the 5% rate.

Under Article 9.2 of the OECD Model Rules, the percentages used apply to reporting years starting in the calendar years referred to in that article. The percentages of, for example, 9.8% for employee costs and 7.8% for tangible assets should apply to reporting years starting in the calendar year 2024.

The Dutch Act confirms that for Dutch purposes, for all intents and purposes there is no 10% or 8% rate for the SBIE, as they would apply to reporting years starting in the calendar year 2023 (and for practical purposes there are no reporting years that starting on December 31, 2023.)

Qualifying Domestic Minimum Top-Up Tax

Article 3 of the Minimum Tax Act includes a domestic minimum tax that is likely to be a QDMTT. This allows the Netherlands to levy top-up tax on the profits of low-taxed Dutch-based entities of MNE groups that don’t have a UPE in the Netherlands.

For groups with annual revenues of at least €750 million, the top corporate income tax rate will apply to most of the profits (25.8% for 2023). Nevertheless, there are a number of differences between the domestic corporate income tax regime and the GloBE rules that may lead to a low GloBE ETR. Eg if profits are exempt under the participation exemption or if a liquidation loss is is deductible under the liquidation loss rule.

If there are a number of group entities from the same MNE group subject to tax under a QDMTT they are to be treated as a single taxpayer. In this case the QDMTT applies to a  parent entity established in the Netherlands whose interest is not directly or indirectly held by another group entity established in the Netherlands. If there are multiple parent entities established in the Netherlands or no parent entity established in the Netherlands, the entity that bears the QDMTT is to be determined by the group or Tax Authority.

The calculation of the QDMTT is relatively straightforward. In particular it applies the Top-Up Tax calculated under the general GloBE rules and then subjects this to a small number of adjustments.

Key points to note are:

-Articles 3.2/8.13 of the Minimum Tax Act apply the Local Accounting Standard rule as provided in the OECD Second Set of OECD Administrative Guidance.

As such, the QDMTT is based on the Local Financial Accounting Standard where all of the Constituent Entities located in the Netherlands have financial accounts based on that standard and:

-they are required to keep or use those accounts under domestic law; or

-the financial accounts are subject to an external financial audit.

If these conditions are not met, (or the fiscal year of the financial statements prepared on the basis of the Local Accounting Standard is different to the Fiscal Year of the Consolidated Financial Statements of the MNE Group) the UPE accounting standard or other acceptable/authorised accounting standard is used (adjusted to prevent Material Competitive Distortions if relevant). The December 2024 Amending Law introduces a ‘tie-breaker  rule’  where the financial reporting of all group entities  established  in  the  Netherlands has been prepared on the basis of more than one  local financial reporting standard.

Article 3.2(4) of the December 2024 Amending Law implements provisions of the Second Set of OECD Administrative Guidance which provides some specific rules relating to the currency to be used for calculating the QDMTT.

The general rule is that where all the Constituent Entities in the jurisdiction use euros as their functional currency, the QDMTT requires the relevant computations in that currency.

However, if not all Constituent Entities in the jurisdiction use euros as their functional currency, the Filing Constituent Entity may make a Five-Year Election to undertake the QDMTT computations for all Constituent Entities in the jurisdiction either:

1. in the presentation currency of the Consolidated Financial Statements; or

2. in euros.

 – As provided in the Administrative Guidance, a QDMTT must exclude:

1.  tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules and
2. tax paid or incurred by a Main Entity that is allocated to a PE in the jurisdiction.

This is provided for in Article 7.5(9) of the Minimum Tax Act.

 – The July 2023 OECD Administrative Guidance provides further rules for the allocation of taxes for the purposes of a domestic minimum tax being a QDMTT.

In particular it excludes tax allocated to hybrids as well taxes on dividends (except domestic WHT).

An amendment to Section S7.5 of the Act provides for this.

 – In order to avoid circularity, the top-up tax calculation formula for the QDMTT must be amended so that the QDMTT itself is not deducted. Article 3.2.1(a) of the Minimum Tax Act provides for this.

 – Any QDMTT that has not been paid within four years is usually taken into account for top-up tax purposes in the fifth year. This does not apply for the QDMTT calculation (just for tax under an IIR or UTPR).

There are therefore very few adjustments for the Dutch QDMTT. The OECD Administrative Guidance allows for more flexibility for the QDMTT design, but the Dutch QDMTT is very similar to top-up tax for GloBE purposes. For instance, the OECD Administrative Guidance provides that:

– The QDMTT can be more restrictive than the GloBE Rules where the tighter restriction is consistent with local tax rules.

– The GloBE Loss Election, Substance-Based Income Exclusion and De Minimis rules do not need to be included.

For Dutch QDMTT purposes neither of these adjustments are made and the general GloBE rules apply.

Article 8.2(9) applies Article 11(1) of the EU Minimum Tax Directive so that if a QDMTT has been computed in accordance with the UPE’s acceptable financial accounting standard or International Financial Reporting Standards, no top-up tax is calculated for the MNE group or large-scale domestic group.

– The December 2024 Amending Law includes a new Article 14.1a in the Minimum Tax Act to apply the approach taken in the OECD Commentary to cases where the first Fiscal Year that a QDMTT applies to domestic Constituent Entities located in the Netherlands is before or after the first Fiscal Year in which the GloBE Rules apply to those Constituent Entities. In particular, various tax attributes are amended as provided in para 118.49.2 of the OECD Commentary.

Filing

The relevant aspects of the submission of a GloBE Information Return (GIR) are included, as provided in the EU Directive.

It provides that every Constituent Entity located in the Netherlands will have an obligation to file a GIR in the Netherlands. However, this obligation can be discharged if the GIR is filed by:

– The Ultimate Parent Entity, or

– The Designated Filing Entity.

Where the GIR is being filed by either the Ultimate Parent Entity or the Designated Filing Entity, the Constituent Entity, must file a notification with the Revenue.

The notification must contain:

– Details of the entity that is filing the GIR, and

– The jurisdiction in which such an entity is located.

Where the GIR is filed by the Designated Local Entity it needs to outline the Constituent Entities that it is filing on behalf of.

Both the GIR and associated notifications must be filed no later than 15 months after the end of the fiscal year (with an 18-month deadline for the Transition Year).

In-scope MNEs will also need to file a tax return with top-up tax payable by the deadline for filing the return.

The proposed filing deadline for the tax return is seventeen months. This effectively means that a group entity has two more months to file a return and pay the top-up tax, after the period for filing the GloBE Information Return has expired. In the commencement year, the tax return filing deadline/payment deadline is 20 months (August 31, 2026 for the first reporting year to December 31, 2024). The December 2024 Amending Law includes provisions for a short transitional/reporting year that ends before December 31, 2024/March 31, 2025.

The December 2024 Amending Law includes a new Article 14.5 into the Minimum Tax Act to provide for a transitional simplified reporting election. This applies for accounting periods that begin on or before 31 December 2028 and end before 1 July 2030 where none of the entities in the territory have top-up amounts or additional top-up amounts for the accounting period to which the election is to apply or Top-up Tax arises but it does not need to be allocated on a Constituent Entity by Constituent Entity basis. Where this applies it permits MNE Groups to report GloBE information at a jurisdictional level.

Payment

Article 11.1 of the legislation requires payment of top-up tax by the deadline for filing the top-up tax return.

Penalties

Article 12.1 of the legislation provides that interest is payable on any top-up tax underpayments.

Interest is calculated on a simple basis over the period commencing on the day following the last day of the payment term, until the day prior to the day on which the additional tax assessment is due.

Article 12.4 of the legislation provides for a penalty of up to 100% of the tax outstanding for a negligent failure to file a GloBE information return. 

None issued.