Netherlands updates hybrid mismatch guidance with new rules on US tax regimes, permanent establishments

The Netherlands issued Decree No. 2026-12123 updating its hybrid mismatch policy with new guidance on GILTI and NCTI regimes, asset depreciation treatment, disregarded permanent establishments, and cessation losses, replacing the previous 2021/2022 policy. 

The Netherlands published the Hybrid Mismatch Policy Decision 2026 (Decree No. 2026-12123), issued by the State Secretary of Finance on 24 July 2026, replacing the previous policy decision that was originally issued in 2021 and subsequently updated in 2022.

The 2026 Policy Decree on Hybrid Mismatches provides official guidance from the Dutch State Secretary for Finance regarding measures to prevent tax avoidance through international legal discrepancies. These regulations target situations where differences between national tax systems lead to double deductions or payments that are deductible in one country but remain untaxed in another.  The policy updates previous guidelines by introducing specific rules for US tax regimes like GILTI and NCTI, as well as providing clarity on the treatment of fixed assets and inventory.

Aside from the specific additions outlined below and some minor editorial adjustments, no other substantive changes were made compared to the prior policy.

The key additions and changes introduced in the new decree:

New Section 2.3: GILTI and NCTI regimes (US tax regimes) 

This section clarifies how the Dutch hybrid mismatch rules interact with US Controlled Foreign Company (CFC)-like regimes, specifically the Global Intangible Low-Taxed Income (GILTI) regime, which was in place until 2025, and its 2026 replacement, the Net CFC Tested Income (NCTI) regime.

• No inclusion in taxation: Under both regimes, a US shareholder faces an additional tax on the income of their foreign subsidiaries, but this is offset by a substantial base reduction (up to 50% for GILTI and up to 40% for NCTI). Because of this base reduction, the income is not fully taxed at the regular statutory rate. Consequently, this (additional) US taxation does not qualify as an “inclusion in taxation” for the hybrid mismatch rules.
• No double deduction: If a Dutch corporate taxpayer takes a cost deduction that is also factored in by its US shareholder when applying the GILTI or NCTI regimes, this overlap cannot lead to a “double deduction” under the hybrid mismatch rules.

New Section 2.4: Business assets, inventory, or stock goods 

This section addresses the timing and capitalisation of expenditures.

Buying assets, inventory, or stock doesn’t trigger hybrid mismatch rules at purchase—those costs are capitalised on the balance sheet rather than immediately deducted. The risk emerges later: when the asset is depreciated or written down, a double deduction can occur if both jurisdictions claim the same depreciation expense.

Timing differences between when each jurisdiction recognises depreciation are disregarded in this check. If a company claims duplicate depreciation alongside dual-inclusion income (for example, from selling the asset), the Netherlands may deny its deduction to the extent it exceeds that dual-inclusion income.

New Section 4.1: Disregarded permanent establishments (PE) 

A “disregarded permanent establishment” occurs when the head office state assumes that a permanent establishment exists in another state, but that other state’s national tax laws do not recognise it as such.

Example case: The decree highlights the Maquiladora regime in Mexico as a primary example. If a Dutch BV operates an enterprise in Mexico, the Netherlands may consider it a PE under Dutch corporate tax law. However, if Mexican national law (via the Maquiladora regime) dictates that the Dutch BV does not have a PE there, it qualifies as a disregarded permanent establishment under the mismatch rules.

New Section 4.2: Permanent Establishment Cessation Losses 

This section provides clarity on the treatment of “cessation losses” when a taxpayer ceases to derive profits from a foreign PE.

The Dutch object exemption doesn’t cover cessation losses from a permanent establishment, so losses can be deducted in the Netherlands. Since these losses are permanent and unavailable for relief in the former PE’s home state, claiming them in the Netherlands doesn’t constitute double deduction. The only exception occurs if the identical loss is also claimed in a third jurisdiction.

Updated Section 4.3: Dual-inclusion income and cost-plus situations 

This section focuses on scenarios where income is taken into account twice, providing relief from the ATAD2 deduction limitations to prevent double taxation.

Following consultations with the European Commission, the State Secretary determined that in certain cost-plus situations, there is room to conclude that “dual-inclusion income” exists. The decree adds complex new examples (e.g., cost-plus situations involving a US  ‘partnership’ or a US parent company where the Dutch entity is disregarded for US tax purposes).

In these structures, even if a cost triggers a double deduction, the ATAD2 limitation may not apply in the Netherlands if the sales revenue tied to the Dutch entity’s cost-plus remuneration is taxed at the parent level, thereby qualifying as dual-inclusion income. The burden of proof remains on the taxpayer to demonstrate their situation matches these examples.

The decree also officially removes an outdated deviating arrangement that was previously listed under this section, as its relevance has completely lapsed.