NETHERLANDS Law and Practice Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar and Willem Koeleman, Borgen Tax
Borgen Tax Jachthavenweg 124 1081 KJ Amsterdam Netherlands Tel: +31 6 12 744 243 Email: jimmie.vanderzwaan@borgentax.nl Web: www.borgentax.nl
1. Rules Governing Transfer Pricing 1.1 Statutes and Regulations The arm’s length principle and the Dutch transfer pric - ing documentation requirements are codified in Article 8b of the Dutch Corporate Income Tax Act (DCITA). For multinational enterprises (MNEs) with an annual consolidated revenue below EUR50 million, the doc - umentation is free of specific formal requirements but should be appropriate to substantiate the arm’s length character of the pricing. Master file and local file documentation and country-by-country reporting (CbCR) requirements are codified in Article 29b–29h of the DCITA. Master file/local file documentation is applicable to multinationals with consolidated annual turnover exceeding EUR50 million, whereas CbCR requirements have a revenue threshold of EUR750 million. Local files should be updated on an annual basis, while benchmark studies should be updated once every three years, assuming there are no relevant changes to the business model. In addition, the state secretary of finance has issued several decrees that involve transfer pricing. The most relevant of these are: • Stcrt No 2023, 2621, providing guidance on Article 8bd of the DCITA; • Stcrt No 2023, 25745, on rulings with an interna - tional character; • Stcrt No 2022, 16685, on the application of the arm’s length principle and the OECD Transfer Pric - ing Guidelines; • Stcrt No 2022, 16683 providing guidance on how the Dutch Tax Authority (DTA) attributes profits to permanent establishments;
• Stcrt No 2020, 32689, on mutual agreement proce - dures (MAPs); • Stcrt No 2019, 66184, which provides guidance on penalties with respect to CbCR; and • Stcrt No 2015, 47457, providing guidance on the transfer pricing documentation requirements. The decree Stcrt No 2019, 13003, providing guidance on the renewed advance pricing agreement (APA) practice of the DTA was amended with the decree Stcrt No 2023, 25745 in December 2023. The decrees are not laws – nevertheless they are bind - ing for the tax authorities. Furthermore, Dutch transfer pricing legislation is based on the OECD Transfer Pric - ing (TP) Guidelines. 1.2 Current Regime and Recent Changes History of Transfer Pricing Rulings in the Netherlands Before 2002, the arm’s length principle was not explic - itly included in the DCITA. It was understood, how - ever, that it was already applicable through general principles regarding profit determination, which were enacted in Article 8 of the DCITA. The arm’s length principle was only enacted in Dutch law in 2002. Until then, some perceived there was insufficient clarity on how to apply the arm’s length principle, as also concluded in the decision of the Court of Appeal of ‘s-Hertogenbosch on 20 June 2000. At that time, there was also international pres - sure on the Netherlands to clarify its position. Due to these developments, the arm’s length principle was codified in Article 8b of the DCITA in 2002.
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