On September 22, 2023 the mutual agreement on the implementation of the arbitration process pursuant to Article 25, Paragraph 5 of the Dutch-Swiss DTA as agreed between the Dutch and the Swiss competent authorities was published in the Dutch State Gazette. The agreement was signaed on September 22, 2022.

Some of the important matters arranged for in the mutual agreement include a.o.:

The competent authorities of the Swiss Confederation and the Kingdom of the Netherlands have entered into the following mutual agreement pursuant to paragraph 5 of Article 25 of the Convention of 26 February 2010 between the Swiss Confederation and the Kingdom of the Netherlands for the avoidance of double taxation with respect to taxes on income (the “Convention”) to establish the mode of application of the arbitration process.

A request that unresolved issues arising from a mutual agreement case be submitted to arbitration pursuant to paragraph 5 of Article 25 of the Convention (the “request for arbitration”) shall be made in writing and sent to one or both of the competent authorities. The request shall contain sufficient information to identify the case. The request shall also be accompanied by a written statement by each of the persons who either made the request or is directly affected by the case that no decision on the same issues has already been rendered by a court or administrative tribunal of the Contracting States. Within 30 days after the receipt of the request, a competent authority who received it without any indication that it was also sent to the other competent authority shall send a copy of that request and the accompanying statements to the other competent authority.

A request for arbitration may only be made after three years from the date on which a case presented to the competent authority of one Contracting State under paragraph 1 of Article 25 has also been presented to the competent authority of the other Contracting State.

The arbitration panel shall consist of three individual arbitrators with expertise and experience in international tax matters. Each arbitrator appointed to the arbitration panel must be impartial and independent of the competent authorities, tax administrations, and ministries of finance of the Contracting States and of all persons directly affected by the case (as well as their advisors) at the time of accepting an appointment, maintain his or her impartiality and independence throughout the proceedings, and avoid any conduct for a reasonable period of time thereafter which may damage the appearance of impartiality and independence of the arbitrators with respect to the proceedings.

Within 60 days after the request for arbitration (or a copy thereof) has been received by both competent authorities, the competent authorities shall each appoint one arbitrator. Within 60 days after the latter appointment, the arbitrators so appointed will appoint a third arbitrator among the list established between the competent authorities who will function as Chair. The Chair shall not be a national or resident of either Contracting State.

Within 60 days after the appointment of the Chair of the arbitration panel (unless, before the end of that period, the competent authorities agree on a different period or agree to use a different approach), the competent authority of each Contracting State shall submit to the Chair of the arbitration panel a proposed resolution which addresses all unresolved issue(s) in the case (taking into account all agreements previously reached in that case between the competent authorities).

Within 60 days after the appointment of the Chair of the arbitration panel, the competent authority of each Contracting State may also submit to the Chair of the arbitration panel a supporting position paper for consideration by the arbitrators.

Each competent authority may also submit to the arbitrators and to the other competent authority, within 120 days after the appointment of the Chair of the arbitration panel, a reply submission with respect to the proposed resolution and supporting position paper submitted by the other competent authority.

The arbitration panel shall select as its decision one of the proposed resolutions for the case submitted by the competent authorities with respect to each issue and any threshold questions, and shall not include a rationale or any other explanation of the decision.

In the event that the competent authority of one Contracting State fails to submit a proposed resolution in a timely manner, the arbitration panel will select as its decision the proposed resolution submitted by the other competent authority.

The two competent authorities can chose, by common consent, a streamlined arbitration process. If so, the two competent authorities shall, by common consent, jointly appoint one arbitrator, within 60 days of the date of the request for arbitration.

Where, at any time after a request for arbitration has been made and before the arbitrators have delivered a decision to the competent authorities, the competent authorities notify in writing the arbitrators:

a) that they have solved all the unresolved issues that were subject to arbitration, or

b) that the person who presented the case has withdrawn the request for arbitration or the request for a mutual agreement procedure, or

c) a decision concerning the issue is rendered by a court or administrative tribunal of either State

no arbitration decision shall be provided and the mutual agreement procedure shall be considered to have been completed.

The arbitration decision with respect to the issues submitted to arbitration shall be implemented through a mutual agreement between the competent authorities within 180 days after the communication of the decision to them. The arbitration decision shall be final and be binding on both Contracting States except in the following cases:

a) if a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision. In such a case, the case shall not be eligible for any further consideration by the competent authorities. The mutual agreement that implements the arbitration decision on the case shall be considered not to be accepted by a person directly affected by the case if any person directly affected by the case does not, within 60 days after the date on which notification of the mutual agreement is sent to the person, withdraw all issues resolved in the mutual agreement implementing the arbitration decision from consideration by any court or administrative tribunal or otherwise terminate any pending court or administrative proceedings with respect to such issues in a manner consistent with that mutual agreement; or

b) if a person directly affected by the case pursues litigation on the issues which were resolved in the mutual agreement implementing the arbitration decision in any court or administrative tribunal; or

c) the arbitration decision is found to be unenforceable by the courts of one of the Contracting States because of a violation of paragraph 5 of Article 25 or for any other reasons. In such a case, the request for arbitration under paragraph 1 shall be considered not to have been made, and the arbitration process shall be considered not to have taken place (except for the purposes of paragraphs 20, 21, 22, 23 and 24). In such a case, a new request for arbitration may be made, unless the competent authorities agree that such a new request should not be permitted, within 90 days after the decision of the court.

This mutual agreement applies to any request for arbitration made pursuant to paragraph 5 of Article 25 of the Convention concerning assessments for taxable years and periods beginning on or after 1 January 2012, with the exception of paragraphs 2 and 3 that will apply only to cases where the request for the initiation of the mutual agreement procedure made pursuant to paragraph 1 of Article 25 of the Convention was submitted after the time of signature of this agreement.

For mutual agreement procedures pending at the time of signature of this agreement, the arbitration start date will be determined by mutual agreement between the competent authorities.

The full text of the mutual agreement as published in the Dutch State Gazette of September 22, 2023 in the Dutch State Gazette can be found here.

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