The Netherlands issues proposed Pillar Two legislation

Local contact

EY Global

31 May 2023
Subject Tax Alert
Categories BEPS 2.0
Jurisdictions Netherlands
  •  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 2022 to 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 QDMT such 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
  • Dirk Stalenhoef
  • Eric Westerburgen
Ernst & Young Belastingadviseurs LLP, International Tax and Transaction Services, Rotterdam
  • Michiel Swets
  • Ronald van den Brekel
Ernst & Young LLP (United States), Netherlands Tax Desk, New York
  • Dirk-Jan (DJ) Sloof
  • Martijn Mulder
  • Rodin Prinsen
  • Özlem Kiliç
  • Bas van Stigt
  • Frederique Kramer
Ernst & Young LLP (United States), Netherlands Tax Desk, Chicago
  • Sebastiaan Boers
  • Daan Hoogwegt
Ernst & Young LLP (United States), Netherlands Tax Desk, San Jose/San Francisco
  • Job Grondhout
  • Laura Katsma
  • Yarikh de Jongh
Ernst & Young Tax Services Limited (Hong Kong), Netherlands Tax Desk, Hong Kong
  • Bas Sijmons
Ernst & Young (China) Advisory Limited (China Mainland), Netherlands/EMEA Tax Desk, Shanghai
  • Moya Wu
Ernst & Young (China) Advisory Limited (China Mainland), Netherlands/EMEA Tax Desk, Beijing
  • Stephanie Wong
EY Corporate Advisors Pte Ltd (Singapore), Netherlands/EMEA Tax Desk, Singapore
  • Carel van Boetzelaer
Ernst & Young LLP (United Kingdom), Netherlands Tax Desk, London
  • Hemmo-Jan Clevering
  • Maarten Sonneveld
  • Michiel Hoozemans
Ernst & Young Tax Co (Japan), Netherlands/EMEA Tax Desk, Tokyo
  • Joris van Huijstee

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

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.