The Netherlands gazetted a Memorandum of Understanding with Finland establishing arbitration procedures under Part VI of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI), with binding arbitration decisions requiring implementation within 180 days.
The Netherlands has gazetted a Memorandum of Understanding (MoU) with Finland establishing the procedures for applying the arbitration provisions set out in Part VI of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI) on 8 July 2026.
The MoU sets out the requirements for initiating arbitration, including the information taxpayers must provide, and establishes rules for appointing independent arbitrators with expertise in international tax matters. It provides for two arbitration approaches: the default “last best offer” method, under which the panel selects one of the competent authorities’ proposed resolutions, and an alternative reasoned decision process if both authorities agree.
The agreement also specifies how arbitration costs will be shared, sets limits on arbitrator fees and expenses, and requires competent authorities to implement arbitration decisions within 180 days through mutual agreement. In addition, it includes strict confidentiality requirements and clarifies that arbitration decisions are binding on the parties but do not create precedent for future cases.
Once the arbitration panel delivers its decision, the competent authorities have 180 days to implement it by reaching a mutual agreement on the case. The arbitration decision is generally binding; however, it will not be binding if a court invalidates it. A court might invalidate the decision based on procedural failures, a violation of arbitrator independence, a breach of confidentiality, or collusion.
