Netherlands
This report analyses the implementation of the AEOI Standard in the Netherlands with respect to the requirements of the AEOI Terms of Reference. It assesses both the legal frameworks put in place to implement the AEOI Standard and the effectiveness of the implementation of the AEOI Standard in practice.
The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.
Overall findings
AEOI legal framework
The Netherlands’ legal framework implementing the AEOI Standard is in place and is consistent with the requirements of the AEOI Terms of Reference. This includes the Netherlands’ domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) and its international legal framework to exchange the information with all the Netherlands’ Interested Appropriate Partners (CR2).
Effectiveness of AEOI in practice
The Netherlands’ implementation of the AEOI Standard is on track with respect to the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. This includes ensuring Reporting Financial Institutions correctly conduct the due diligence and reporting procedures (CR1) and exchanging the information in an effective and timely manner (CR2). The Netherlands is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
Overall rating in relation to the effectiveness in practice: On Track
General context
The Netherlands commenced exchanges under the AEOI Standard in 2017.
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, the Netherlands:
introduced the Decree of 23 December 2015 (Common Reporting Standard Identification and Reporting Requirements (Implementation) Decree);
introduced the Ministerial Order on the Common Reporting Standard made on 30 December 2015;
amended the International Assistance (Levying of Taxes) Act and Money Laundering and Terrorist Financing (Prevention) Act (Implementation) Decree 2018 and further amended it in 2021; and
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2016. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete due diligence procedures on High Value Individual Accounts by 31 December 2016 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2017.
Following the initial Global Forum peer review, the Netherlands amended its legislative framework to address an issue identified, effective from 1 January 2022.
With respect to the exchange of information under the AEOI Standard, the Netherlands:
is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2017;
has in place European Union Directive 2011/16/EU on Administrative Cooperation in the Field of Taxation, as amended by Directive 2014/107/EU;
has in place European Union agreements with five European third countries1; and
put in place three bilateral agreements.2
Table 1 sets out the number of Financial Institutions in the Netherlands that reported information on Financial Accounts in 2021 as defined in the AEOI Standard (essentially because they maintained Financial Accounts for Account Holders, or that were related to Controlling Persons, resident in a Reportable Jurisdiction). It also sets out the number of Financial Accounts that they reported in 2021. In this regard, it should be noted that the Netherlands requires the reporting of Financial Accounts based on a prescribed list of exchange partners and some accounts may be required to be reported more than once (e.g. jointly held accounts or accounts with multiple related Controlling Persons), which is reflected in the figures below. These figures provide key contextual information to the development and implementation of the Netherlands’ administrative compliance strategy, which is analysed in the subsequent sections of this report.
Table 2 sets out the number of exchange partners to which information was successfully sent by the Netherlands in the past few years (including where the necessary frameworks were in place, containing an obligation on Reporting Financial Institutions to report information, but no relevant Reportable Accounts were identified). These figures provide key contextual information in relation to the Netherlands’ exchanges in practice, which is also analysed in subsequent sections of this report.
In order to provide for the effective implementation of the AEOI Standard, in the Netherlands:
the Tax and Customs Administration of the Ministry of Finance (the tax authority) has the responsibility to ensure the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions and for exchanging the information with the Netherlands’ exchange partners;
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place by implementing an electronic channel for reporting and systems to validate received XML files against the CRS schema and to manage notifications (NAS); and
the Common Transmission System (CTS), and in the European Union (EU) the Common Communication Network (CCN), are used for the exchange of the information, along with the associated file preparation and encryption requirements.
It should be noted that the review of the Netherlands’ legal frameworks implementing the AEOI Standard concluded with the determination that the Netherlands’ domestic and international legal frameworks are In Place. This has been taken into account when reviewing the effectiveness of the Netherlands’ implementation of the AEOI Standard in practice.
Findings and conclusions on the legal frameworks
The detailed findings and conclusions on the AEOI legal frameworks for the Netherlands are below, organised per Core Requirement (CR) and sub-requirement (SR), as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.
The Netherlands’ domestic legislative framework is in place and contains all of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (SRs 1.1 – 1.3). It also provides for a framework to enforce the requirements (SR 1.4).
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
The Netherlands has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
The Netherlands has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in accordance with the CRS and its Commentary.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
The Netherlands has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
The Netherlands has a legislative framework in place to enforce the requirements in accordance with the CRS and its Commentary.
CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.
The Netherlands’ international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of the Netherlands’ Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from the Netherlands and that meet the required standard in relation to confidentiality and data safeguards) (SRs 2.1 – 2.3).
SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.
The Netherlands has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.
SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.
The Netherlands put in place its exchange agreements without undue delay.
SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.
The Netherlands’ exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.
Findings and conclusions in relation to effectiveness in practice
The detailed findings and conclusions in relation to effectiveness in practice of AEOI for the Netherlands are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Effectiveness in practice: Jurisdictions should ensure that in practice Reporting Financial Institutions correctly implement the due diligence and reporting procedures, which includes a requirement for jurisdictions to have in place an administrative framework to ensure the effective implementation of the CRS.
The Netherlands’ implementation of the AEOI Standard is on track with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures and are therefore reporting complete and accurate information. This includes ensuring effectiveness in a domestic context, such as through having an effective administrative compliance framework and related procedures (SR 1.5), and collaborating with exchange partners to ensure effectiveness (SR 1.6). The Netherlands is encouraged to continue its implementation process to ensure its ongoing effectiveness.
SR 1.5 Jurisdictions should ensure that in practice Reporting Financial Institutions identify the Financial Accounts they maintain, identify the Reportable Accounts among those Financial Accounts, as well as their Account Holders, and where relevant Controlling Persons, by correctly conducting the due diligence procedures and collect and report the required information with respect to each Reportable Account. This includes having in place:
an effective administrative compliance framework to ensure the effective implementation of, and compliance with, the CRS. This framework should:
be based on a strategy that facilitates compliance by Reporting Financial Institutions and which is informed by a risk assessment in respect of the effective implementation of the CRS that takes into account relevant information sources (including third party sources);
include procedures to ensure that Financial Institutions correctly apply the definitions of Reporting Financial Institutions and Non-Reporting Financial Institutions; and
include procedures to periodically verify Reporting Financial Institutions’ compliance, conducted by authorities that have adequate powers with respect to the reviewed Reporting Financial Institutions, with procedures to access the records they maintain.
effective procedures to ensure that Financial Institutions, persons or intermediaries do not circumvent the due diligence and reporting procedures;
effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions;
strong measures to ensure that valid self-certifications are always obtained for New Accounts;
effective procedures to ensure that each, or each type of, jurisdiction-specific Non-Reporting Financial Institution and Excluded Account continue to present a low risk of being used to evade tax; and
effective procedures to follow up with a Reporting Financial Institution when undocumented accounts are reported in order to establish the reasons why such information is being reported.
In order to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, the Netherlands implemented most of the requirements in accordance with expectations. However, some issues were identified. The key findings were as follows:
The Netherlands implemented an overarching strategy to ensure compliance with the AEOI Standard developed after conducting a risk assessment that took into account a range of relevant information sources, such as internal tax information from taxpayers and administrators from several areas in the tax administration, data reported and notifications from exchange partners.
The Netherlands has worked to understand its population of Financial Institutions, including relevant non-regulated entities, utilising various relevant information sources. These include self-registration, contact with account managers for banks and insurance companies, the registers of entities regulated by the Authority for the Financial Markets (AFM) and the Dutch National Bank (DNB), the Foreign Financial Institution list for FATCA purposes, information from the tax authority Internet Computer Service Centre and results of the onsite visits. The Netherlands ensures that Reporting Financial Institutions are classifying themselves correctly under their domestic rules and reporting information as required. The Netherlands intends to keep its understanding of its Financial Institution population up to date on a routine basis.
The Directorate-General for the Tax Administration, responsible for implementing the Netherlands’ compliance strategy, appears to have the necessary powers and resources to discharge its functions. With respect to resourcing, reporting under the AEOI Standard was integrated into other processes in the tax administration and several departments contribute to monitor and ensure compliance by Reporting Financial Institutions. This translates into an equivalent of around seven full time staff, complemented by staff from the Financial Institutions unit that supervises some Reporting Financial Institutions. The Financial Institutions unit is also being expanded to include specialists for the AEOI Standard. The staff have access to IT systems and tools to conduct risk assessments (e.g. planned communication spaces with Financial Institutions, tax reporting platform). Overall, they appear to have effectively implemented an operational plan to verify compliance with the requirements, incorporating appropriate compliance activities.
The Netherlands’ compliance strategy is based on a horizontal monitoring approach that relies heavily on early and ongoing engagement and communication with Financial Institutions to ensure compliance and reviews of their internal control measures to ensure compliance, including through onsite visits. The Netherlands has already conducted such compliance activities in practice. However, while they are planned, no audits have yet been conducted of underlying due diligence documentation in relation to specific Financial Accounts (e.g. the evidence relied upon when carrying out the due diligence procedures). Furthermore, activities have not yet been undertaken to ensure that the interaction between the Netherlands AEOI and AML frameworks always results in reporting in accordance with the AEOI Standard.
The Netherlands intends to keep its compliance strategy and risk assessment under review to ensure its effectiveness on an ongoing basis. The Netherlands plans to use the results of the onsite visits to assess if the horizontal monitoring approach has been effective in ensuring compliance and to verify if the due diligence rules in non-binding guidance are being applied.
The Netherlands incorporates a credible approach to enforcement consisting of assisting the Financial Institutions to provide the required information after non-compliance is identified and, in some cases, a formal letter from the tax administration is issued. The Netherlands analyses the reasons or non-compliance and acts to promote and enforce future compliance. These steps have been sufficient to rectify the issue in all cases so far and no penalties have had to be imposed, but additional enforcement procedures are in place.
The Netherlands plans to take action to address circumvention of the requirements if such circumvention is detected. The Netherlands also has plans to include the monitoring of all undocumented accounts in its compliance plan.
The Netherlands will keep its jurisdiction-specific lists of Non-Reporting Financial Institutions and Excluded Accounts under review to ensure they continue to pose a low risk of being used for tax evasion purposes.
Table 3 provides a summary of the specific activities undertaken, or that are planned to be undertaken, in relation to each of the key parts of the framework described above.
With respect to the Financial Account information collected and sent by the Netherlands, the presence of the key data points of the Tax Identification Numbers and dates of birth appeared to be in line with most other jurisdictions, as did the level of undocumented accounts.
Two exchange partners highlighted issues with respect to the information received, such as missing accounts. Follow-up discussions confirmed that the Netherlands is aware of these issues and is seeking to improve the situation. More generally, many of the exchange partners that received a significant number of records from the Netherlands indicated that they achieved a success rate when matching the information received from the Netherlands with their taxpayer database that was broadly equivalent to, or better than, what they usually achieve.
Based on these findings it was concluded that, overall, the Netherlands is meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. It was also noted that there is room for improvement with respect to fully implementing its review plans and following up with Reporting Financial Institutions that report undocumented accounts. The Netherlands should therefore continue its implementation process accordingly, including by addressing the recommendations made.
The Netherlands should further implement its verification activities to include the inspection of the records held by Reporting Financial Institutions of the evidence relied upon by Reporting Financial Institutions.
The Netherlands should actively monitor the interaction between its AML and AEOI frameworks to ensure that the collection and reporting of information under the AEOI Standard is in accordance with the requirements.
The Netherlands should implement a clearly defined policy to follow up with Reporting Financial Institutions that report undocumented accounts to ensure that the requirements are being complied with.
SR 1.6 Jurisdictions should collaborate on compliance and enforcement. This requires jurisdictions to:
use all appropriate measures available under the jurisdiction’s domestic law to address errors or non-compliance notified to the jurisdiction by an exchange partner; and
have in place effective procedures to notify an exchange partner of errors that may have led to incomplete or incorrect information reporting or non-compliance with the due diligence or reporting procedures by a Reporting Financial Institution in the jurisdiction of the exchange partner.
In order to collaborate on compliance and enforcement, it appears that the Netherlands implemented all of the requirements in relation to issues notified to them (i.e. under Section 4 of the MCAA or equivalent) in accordance with expectations. While no such notifications have yet been received, the Netherlands has the necessary systems and procedures to process them as required. It also appears that the Netherlands will notify its partners effectively of errors or suspected non-compliance it identifies when utilising the information received.
Based on these findings it was concluded that the Netherlands is fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. The Netherlands is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
CR2 Effectiveness in practice: Jurisdictions should exchange the information effectively in practice, in a timely manner, including by sorting, preparing, validating and transmitting it in accordance with the AEOI Standard.
The Netherlands’ implementation of the AEOI Standard is on track with respect to exchanging the information effectively in practice, including in relation to sorting, preparing and validating the information (SR 2.4), correctly transmitting the information in a timely manner (SRs 2.5 – 2.8) and providing corrections, amendments or additions to the information (SR 2.9). The Netherlands is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
SR 2.4 Jurisdictions should sort, prepare and validate the information in accordance with the CRS XML Schema and the associated requirements in the CRS XML Schema User Guide and the File Error and Correction-related validations in the Status Message User Guide (i.e. the 50000 and 80000 range).
Five exchange partners highlighted particular issues with respect to preparation and format of the information sent by the Netherlands (representing 7% of its partners). These generally related to incorrect file identification and record validation errors. More generally, six (or 8%) of the Netherlands’ exchange partners reported rejecting more than 25% of the files received, of which three reported rejecting more than 50% of files received, due to the technical requirements not being met. This is a relatively high amount when compared to other jurisdictions and it has increased over time. It was noted that the Netherlands has already successfully addressed most of the issues.
Based on these findings it was concluded that the Netherlands is partially meeting expectations in relation to sorting, preparing and validating the information. However, significant issues have been identified, including with respect to routinely addressing issues reported by partners. The Netherlands should therefore continue its implementation process accordingly, including by addressing the recommendations made.
The Netherlands should continue to work with its exchange partners to address the issues raised.
The Netherlands should review its systems and procedures for sorting, preparing and validating the information to send to its exchange partners, to ensure they meet the requirements of the AEOI Standard.
SR 2.5 Jurisdictions should agree and use, with each exchange partner, transmission methods that meet appropriate minimum standards to ensure the confidentiality and integrity of the data throughout the transmission, including its encryption to a minimum secure standard.
In order to put in place an agreed transmission method that meets appropriate minimum standards in confidentiality, integrity of the data and encryption for use with each of its exchange partners, the Netherlands linked to the CTS and the CCN, which is used for exchanges within the EU.
Based on these findings it was concluded that the Netherlands is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. The Netherlands is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.6 Jurisdictions should carry out all exchanges annually within nine months of the end of the calendar year to which the information relates.
One exchange partner highlighted delays in the sending of information by the Netherlands. It was noted that the Netherlands successfully addressed all of the issues and sent the information as soon as possible thereafter.
Based on these findings it was concluded that the Netherlands is fully meeting expectations in relation to exchanging the information in a timely manner. The Netherlands is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.7 Jurisdictions should send the information in accordance with the agreed transmission methods and encryption standards.
Feedback from the Netherlands’ exchange partners did not raise any concerns with respect to the Netherlands’ use of the agreed transmission methods and therefore with the Netherlands’ implementation of this requirement.
Based on these findings it was concluded that the Netherlands is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. The Netherlands is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.8 Jurisdictions should have the systems in place to receive information and, once it has been received, should send a status message to the sending jurisdictions in accordance with the CRS Status Message XML Schema and the related User Guide.
Two exchange partners highlighted delays in the sending of status messages by the Netherlands, representing 3% of its partners. It was noted that the Netherlands is successfully addressing the issues to ensure that status messages are sent in accordance with the requirements.
Based on these findings it was concluded that the Netherlands is fully meeting expectations in relation to the receipt of the information. The Netherlands is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.9 Jurisdictions should respond to a notification from an exchange partner as referred to in Section 4 of the Model CAA (which may include Status Messages) in accordance with the timelines set out in the Commentary to Section 4 of the Model CAA. In all other cases, jurisdictions should send corrected, amended or additional information received from a Reporting Financial Institution as soon as possible after it has been received.
The Netherlands appears ready to respond to notifications and to provide corrected, amended or additional information in a timely manner and no such concerns were raised by the Netherlands’ exchange partners and therefore with respect to the Netherlands’ implementation of these requirements.
Based on these findings it was concluded that the Netherlands appears to be meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. The Netherlands is encouraged to continue to ensure the ongoing effectiveness of its implementation.
Assessed jurisdiction’s comments on the assessment of effectiveness in practice
Thank you for the recommendations. We acknowledge them and already identified them ourselves.
To further implement our verification activities, in order to include the inspection of records held by Reporting FI’s and the follow up, the Netherlands is reorganizing all automated exchanges of information. This reorganization will also enable the Netherlands to continue to actively monitor the interaction between AML and AEOI frameworks to ensure collection and reporting of information is in accordance with the requirements. Full implementation is scheduled for September 2022.
The assessment of undocumented accounts is already part of our review process. Furthermore, the number of reported undocumented accounts shows in the macro-analysis that is made yearly for each FI and is part of the discussion when giving feedback to an FI on the quality of reported data.
The Netherlands will continue to work with our exchange partners to address issues raised. Via our Central Liaison Office we have good contacts with our exchange partners, which ensures (most) issues are addressed successfully. The Netherlands has a fully automated system for sorting, preparing and validating information before sending it to our exchange partners. Before sending the information, the Netherlands performs a control procedure to check whether the files meet the requirements (XSD).
The Netherlands will continue its implementation processes to ensure the ongoing effectiveness.