The impact of the mandatory Foreign Tax Credit for the Dutch Model B CFC - application
(2026) HARN60 20261Department of Business Law
- Abstract (Swedish)
- This thesis examines the extent to which the judgment of the Court of Justice of the European Union in Commission v Belgium (C-524/23), regarding Belgium’s failure to comply with the Directive by failing to correctly transpose Article 8(7) of the Anti-Tax Avoidance Directive (ATAD) into its domestic legal framework, impacts the Dutch transfer pricing rules under Article 8b of the Corporate Income Tax Act 1969 (CITA) and whether it necessitates a Foreign Tax Credit for upward transfer pricing adjustments falling within the scope of ATAD’s CFC provisions.
Through doctrinal legal research that combines legal-dogmatic, descriptive, evaluative and comparative analysis, the thesis first establishes the legal framework of ATAD’s CFC regime... (More) - This thesis examines the extent to which the judgment of the Court of Justice of the European Union in Commission v Belgium (C-524/23), regarding Belgium’s failure to comply with the Directive by failing to correctly transpose Article 8(7) of the Anti-Tax Avoidance Directive (ATAD) into its domestic legal framework, impacts the Dutch transfer pricing rules under Article 8b of the Corporate Income Tax Act 1969 (CITA) and whether it necessitates a Foreign Tax Credit for upward transfer pricing adjustments falling within the scope of ATAD’s CFC provisions.
Through doctrinal legal research that combines legal-dogmatic, descriptive, evaluative and comparative analysis, the thesis first establishes the legal framework of ATAD’s CFC regime under Articles 7 and 8, before analysing the Court’s findings in Commission v Belgium and the mandatory nature of Article 8(7) ATAD for Model B implementations. Against this background, the Dutch approach for the CFC framework is assessed, which consists of a combination of a partial transposition of Model A and an implicit implementation of Model B. A comparative analysis between the Dutch and Belgian implementations, measured against the ATAD Directive as a neutral benchmark, establishes that both jurisdictions belong to the same ‘ideal type’ of jurisdictions implementing Model B. As both approaches attribute profits of the CFC on the basis of underlying Transfer Pricing concepts and principles while omitting the inclusion of a mandatory Foreign Tax Credit mechanism, thereby exposing taxpayers under the CFC Model B application with potential economic double taxation
The thesis ultimately concludes that the Court’s findings appear to be applicable to the Dutch CFC framework by analogy, which is further strengthened by fact that the Netherlands intervened in Commission v Belgium and had its legal theory justifying for the omission of Article 8(7) ATAD in Model B applications rejected within the same judgement. The impact on the Dutch transfer pricing rules is however limited to only (upwards) transfer pricing corrections for entities and permanent establishments that satisfy the CFC conditions under ATAD. What the broader implications are for non-CFC situations under Article 8b CITA, including the potential horizontal discrimination, remain for now an unresolved question that merits further research. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/student-papers/record/9235221
- author
- Weemering, Xander LU
- supervisor
- organization
- course
- HARN60 20261
- year
- 2026
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Anti-Tax Avoidance Directive, Controlled Foreign Company, Model B, Foreign Tax Credit, Transfer Pricing, Arm’s Length Principle, Article 8b CITA, Comparative Tax Law
- language
- English
- id
- 9235221
- date added to LUP
- 2026-06-15 10:01:31
- date last changed
- 2026-06-15 10:01:31
@misc{9235221,
abstract = {{This thesis examines the extent to which the judgment of the Court of Justice of the European Union in Commission v Belgium (C-524/23), regarding Belgium’s failure to comply with the Directive by failing to correctly transpose Article 8(7) of the Anti-Tax Avoidance Directive (ATAD) into its domestic legal framework, impacts the Dutch transfer pricing rules under Article 8b of the Corporate Income Tax Act 1969 (CITA) and whether it necessitates a Foreign Tax Credit for upward transfer pricing adjustments falling within the scope of ATAD’s CFC provisions.
Through doctrinal legal research that combines legal-dogmatic, descriptive, evaluative and comparative analysis, the thesis first establishes the legal framework of ATAD’s CFC regime under Articles 7 and 8, before analysing the Court’s findings in Commission v Belgium and the mandatory nature of Article 8(7) ATAD for Model B implementations. Against this background, the Dutch approach for the CFC framework is assessed, which consists of a combination of a partial transposition of Model A and an implicit implementation of Model B. A comparative analysis between the Dutch and Belgian implementations, measured against the ATAD Directive as a neutral benchmark, establishes that both jurisdictions belong to the same ‘ideal type’ of jurisdictions implementing Model B. As both approaches attribute profits of the CFC on the basis of underlying Transfer Pricing concepts and principles while omitting the inclusion of a mandatory Foreign Tax Credit mechanism, thereby exposing taxpayers under the CFC Model B application with potential economic double taxation
The thesis ultimately concludes that the Court’s findings appear to be applicable to the Dutch CFC framework by analogy, which is further strengthened by fact that the Netherlands intervened in Commission v Belgium and had its legal theory justifying for the omission of Article 8(7) ATAD in Model B applications rejected within the same judgement. The impact on the Dutch transfer pricing rules is however limited to only (upwards) transfer pricing corrections for entities and permanent establishments that satisfy the CFC conditions under ATAD. What the broader implications are for non-CFC situations under Article 8b CITA, including the potential horizontal discrimination, remain for now an unresolved question that merits further research.}},
author = {{Weemering, Xander}},
language = {{eng}},
note = {{Student Paper}},
title = {{The impact of the mandatory Foreign Tax Credit for the Dutch Model B CFC - application}},
year = {{2026}},
}