The UK and the Netherlands signed a double tax convention on 12 June 2013 in respect of bank taxes. The taxes covered by the Convention are the UK bank levy under Schedule 19 FA 2011 and the tax charged under the Netherlands law on bank tax. The Convention provides for the elimination of double taxation by means of a credit for the bank tax paid in the other contracting state. This may arise where a permanent establishment of a bank in the other contracting state becomes liable to a bank tax on its transactions there.
The agreement provides for a mutual agreement procedure where the actions of a contracting state may result in taxation that is not in accordance with the provisions of the Convention. If the competent authorities fail to reach agreement within two years from the presentation of the case to the competent authority of the other contracting state the unresolved issues may be submitted to arbitration at the request of an entity directly affected by the case. The arbitration decision is binding on the contracting states unless an entity directly affected by the case does not accept the mutual agreement implementing the arbitration decision.
The Convention provides for the exchange of information between the states as necessary to carry out the provisions of the Convention, enforce the domestic laws on bank taxes and to prevent fraud and facilitate measures against tax avoidance.
The Convention is to enter into force after completion of ratification procedures and is to take effect retrospectively from 1 January 2011.
