The USA government has signed a tax information exchange agreement with the Netherlands for income and taxes paid of multinational companies to be automatically exchanged between the Dutch Tax and Customs Administration and the USA tax authorities.
Under rules issued in 2016, the USA requires entities with revenues of $850m or more in the preceding accounting period to file Form 8975, country-by-country report, with the US tax agency, the Internal Revenue Service (IRS). These rules follow USA reporting requirements and the OECD’s Action Plan on Base Erosion and Profit Shifting (BEPS) to stop multinational companies from shifting profits to low tax jurisdictions.
This agreement with the Netherlands will allow USA multinational companies to file Form 8975 with the IRS if the multinational is resident for tax purposes in the Netherlands or has a permanent establishment there.
The agreement stated that both countries recognise that each jurisdiction has the appropriate safeguards in place regarding confidentiality and use of information, as well as the infrastructure for an effective exchange relationship.
The USA has not signed the OECD’s Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports and therefore, must individually negotiate agreements with countries.