NETHERLANDS Law and Practice Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar and Willem Koeleman, Borgen Tax
4.3 Cost Sharing/Cost Contribution Arrangements
assessment until five years after the end of the fiscal year if the taxpayer acts in bad faith or “new facts” appear. 5.2 Secondary Transfer Pricing Adjustments Dutch transfer pricing regulations adhere to the arm’s length principle as outlined in Article 8b of the Dutch Corporate Income Tax Act 1969 and further elabo - rated in the Dutch TP Decree. The Decree emphasises the necessity of recognising secondary transactions to accurately reflect the economic consequences of primary transfer pricing adjustments. In the Nether - lands, when a transfer pricing adjustment (primary adjustment) is made to an intercompany transaction, it is generally also necessary to recognise a correspond - ing secondary transaction to reflect the economic reality of the adjustment. This secondary transaction can take various forms, such as a deemed dividend distribution, an informal capital contribution, or the recognition of a deemed loan between the involved entities. These secondary transactions may trigger additional tax implications, including potential divi - dend withholding tax on deemed distributions or the imputation of arm’s length interest on deemed loans. There are exceptions. If the taxpayer can demonstrate that, due to differences in tax systems between the jurisdictions involved, the secondary adjustment (eg, dividend withholding tax) cannot be offset and there is no intention to avoid taxation, the DTA may omit the secondary adjustment. This exception is not applica - ble if the other jurisdiction is listed as a non-coopera - tive tax jurisdiction in the relevant year; in such cases, the secondary adjustment, including any applicable dividend withholding tax, will be enforced. 6. Cross-Border Information Sharing 6.1 Sharing Taxpayer Information Ruling Exchanges APAs, advance tax rulings (ATRs) and innovation box rulings are exchanged with the tax authorities in the jurisdictions in which the involved parties are tax resi - dent. DAC6
For cost-sharing or cost contribution arrangements (CCAs), the arm’s length principle as elaborated in the OECD Guidelines and, in particular, Chapter VIII of the OECD Guidelines should be followed. Under the arm’s length principle, remuneration should be related to the functions performed (considering the risks incurred and assets used). This means that the level of remuneration of the participants in a CCA may not differ (substantially) from the remuneration that the companies concerned would receive if they were co-operating outside a CCA context. This means, for example, that a participant in a CCA that assumes risks must also exercise control over these risks and have the financial capacity to bear the negative impact of these risks. A participant in a CCA, which only provides financ - ing for the CCA and only exercises control over risks related to that financing and not the risks related to other activities within the CCA, is generally only enti - tled to an arm’s length fee for the financing, taking into account the financing risk. 5. Adjustments 5.1 Upward Transfer Pricing Adjustments The taxpayer can supplement or amend a corpo - rate income tax return if no final assessment has been imposed. If the taxpayer has already received a final assessment, the taxpayer can only pursue adjustments by filing an objection within six weeks or requesting an ex officio reduction within five years after fiscal year-end if the assessment is already final ( ambtshalve vermindering ). If the requested adjust - ment is based on a foreign transfer pricing adjust - ment, a request for a corresponding adjustment or a MAP can be filed. In general, the tax inspector has three years to impose a final tax assessment after the end of the fiscal year. If the extension ruling for consultants, which allows an extension for filing the corporate income tax return until the following fiscal year, is used, the inspector will have an additional year to impose the final tax assess - ment. The tax inspector can impose an additional tax
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