Tax Control Framework (TCF) - Netherlands

Defining the TCF in the Netherlands

A Tax Control Framework (TCF) is a structured approach designed to manage and control tax-related processes and risks. The Dutch tax authorities recognize six core principles within a TCF:

• Strategy
• Tax Function
• Risk Analysis
• Control
• Monitoring
• Reporting

There is no one-size-fits-all approach to implementing a TCF, as each organization’s structure, operations, and risk profile differ. Consequently, the design and application of a TCF should reflect the specific needs and context of the business.

A TCF is particularly important for organizations seeking to participate in Horizontaal Toezicht (Horizontal Supervision)—a cooperative compliance model used by the Dutch tax authorities that emphasizes mutual trust and proactive communication. However, even businesses that do not enter Horizontaal Toezicht can benefit from the TCF framework to strengthen their tax governance and remain in control of their tax obligations in the Netherlands.

In Dutch practice, the terms “Tax Assurance,” “Risico-matrix” (Risk Matrix), and “Tax Monitoring” are often used interchangeably or in close connection with TCF, as they cover overlapping concepts and tools.

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A breakdown of Horizontaal Toezicht

Horizontaal Toezicht is a collaborative compliance model developed by the Dutch tax authorities to foster a cooperative relationship with businesses. Unlike traditional vertical supervision, which relies more heavily on audits and enforcement, Horizontaal Toezicht is built on the principles of mutual trust, transparency, and open communication.

A Tax Control Framework (TCF) plays a central role in this approach. It serves as a tool for businesses to demonstrate how they identify and manage tax risks, what internal controls are in place, and how these are monitored over time. A well-structured and operational TCF is typically a prerequisite for entering into Horizontaal Toezicht, as it provides the Dutch tax authorities with confidence in the organization’s ability to remain compliant proactively.

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Types of organization subject to the TCF

‍A Tax Control Framework (TCF) is not legally mandated, but it is highly relevant for a wide range of organizations that seek to manage tax risks effectively and demonstrate sound tax governance. While it is a key requirement for those entering Horizontaal Toezicht in the Netherlands, a TCF is also widely applicable beyond that context.

Organizations typically subject to or benefitting from a TCF include:

• Large multinationals and listed companies managing complex domestic and international tax matters
• Mid-sized enterprises aiming to improve and formalize their tax governance
• Companies seeking participation in Horizontaal Toezicht and aiming to establish a cooperative relationship with the Dutch tax authorities
• Firms in highly regulated industries—such as finance, insurance, and energy—where tax compliance is integrated into broader risk and governance frameworks
• Public-interest entities (PIEs) and organizations with external audit obligations, where internal control and transparency are expected

The Dutch tax authorities encourage the adoption of a TCF as a best practice. It supports transparency, enhances risk management, and strengthens internal monitoring—benefits that are valuable regardless of whether an organization enters Horizontaal Toezicht.

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Core elements supported by Impero

Risk management

Effective tax risk management begins with a thorough, structured, and regularly updated risk analysis that is documented in a central repository. This foundational component of a Tax Control Framework (TCF) includes:

• Identifying tax-relevant processes and activities across the organization
• Recognizing potential tax risks, such as incorrect VAT treatment of sales or purchase invoices, or misapplication of transfer pricing rules
• Assessing the likelihood and impact of each identified risk, both financially and reputationally

The Dutch tax authorities stress the need for periodic review and clear documentation of risks, controls, and responses. Traditionally, many organizations use Excel-based risk matrices for this purpose. While this is a practical starting point, it presents several challenges as the organization grows:

• Excel lacks real-time tracking and workflow enforcement
• Responsibilities are often unclear or not followed up—leading to gaps in execution
• Actions marked as “recurring” may never actually occur unless manually checked
• Audit trails and version control are limited or absent, which poses a compliance risk

For example, when tax authorities ask whether a company has performed a quarterly reconciliation, it's not uncommon for the responsible team to only start the process after being asked—despite the action being included in their Excel-based risk matrix. This highlights a broader issue: Excel documents often create a false sense of control. Over time, they become passive checklists rather than dynamic tools that drive accountability.

Control activities & monitoring

Once tax risks are identified, it’s essential to establish clear, actionable controls to manage them effectively. Control activities are the mechanisms through which risk responses are operationalized and tax compliance is maintained on a day-to-day basis.

Common tax control activities include:

• Reconciliation procedures to ensure accuracy between financial and tax data
• Four-eyes principles for preparing and reviewing tax filings
• Approval workflows for intercompany or cross-border transactions
• Consistency checks across jurisdictions to validate tax treatment alignment

These controls are most effective when they are documented, consistently executed, and subject to regular review. A common challenge arises when control procedures are known informally or managed in silos—leading to gaps in execution and audit difficulties.

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How Impero can make a difference if you're working to comply with the Dutch TCF

Impero replaces static spreadsheets with a cloud-based, audit-ready solution that actively supports tax governance by:

• Assigning clear ownership of each control and proper documentation of all risks
• Automating recurring tasks, with deadlines, notifications, and escalation workflows
• Tracking execution in real time—ensuring control activities are completed as planned
• Providing centralized documentation and full audit trails, making compliance easy to demonstrate
• Connecting risks to mitigating controls, enabling structured, evidence-backed tax risk management
• Supporting both global and local risk management, with the flexibility to scale across entities and jurisdictions

The Impero platform helps ensure that all your tax risks—whether local or international—are properly documented, actively managed, and continuously monitored. With clear linkage between risks and controls, you can demonstrate control effectiveness and confidently engage with tax authorities and auditors.

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Get started with the Impero platform

Are you looking to strengthen your organization’s compliance with the Dutch Tax Control Framework (TCF)? Impero helps you implement a structured, transparent, and auditable approach to tax governance—whether you're entering Horizontaal Toezicht or simply aiming to stay in control.

👉 Reach out to our team to discover how Impero can support your tax function with automation, accountability, and real-time oversight.