NETHERLANDS Law and Practice Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar and Willem Koeleman, Borgen Tax
Country-by-Country Reporting Based on Article 29h(1) of the DCITA, the taxpayer may receive an administrative fine for deliberate or grossly negligent failure to comply with the obliga - tion to submit a country-by-country (CbC) report or to file a notification that another group entity will file the report. The administrative fine will not exceed the amount of the sixth category ( Wetboek van Strafrecht ) as referred to in Article 23 (4) of the Dutch Penal Code (ie, EUR1,030,000). The administrative fine is imposed by means of a fine decision. Pursuant to the General Administrative Law Act ( Algemene wet bestuursrecht ), objections against such a decision can be submitted to the DTA. Follow - ing the objection, a new decision is taken. An appeal against this decision can be filed with the administra - tive court. 8.2 Transfer Pricing Documentation Specific transfer pricing documentation may be required depending on the annual consolidated rev - enue of the MNE. The Netherlands requires a master file, as well as a local file for MNEs with a consolidated annual revenue of EUR50 million or more, and a CbC report and notifications for MNEs with a consolidated annual revenue of EUR750 million or more. Both have been introduced starting in FY 2016. The Netherlands has implemented the master file/local file and CbCR requirements in accordance with the OECD/G20 BEPS Action Plan 13. The Netherlands does not have a specific deadline for filing 8b documentation, local files, or the master file. These should be maintained at the same time as filing the corporate income tax return and provided to the tax authorities upon request. 9. Alignment With OECD Guidelines 9.1 Alignment and Differences In January 2022, the OECD Transfer Pricing Guide - lines were updated. This update includes the addi - tion of Chapter X to the Guidelines on transfer pricing aspects of financial transactions. In addition, a section on hard-to-value intangibles has been added.
In June 2022, the Dutch Decree Stcrt No 2022/16685 was updated as follows: • The section on government policy has been expanded, with a discussion on government aid measures. • Several new sections on financial transaction have been adjusted. There is more focus on the substance and the application of the compara - ble uncontrolled price method. The paragraphs regarding guarantees and captives have also been rewritten. • There is now a section regarding cash pools. • There is now a section regarding financial service entities. • Adjustments have been made to the policy on intra-group services. • Some textual changes in line with OECD TP Guide - lines have been made. The adjustments are a consequence of international developments, such as the new OECD TP Guidelines and OECD publications on the treatment of govern - ment subsidies. Since the OECD Guidelines provide an internationally accepted interpretation of the arm’s length principle, the secretary of finance considers the OECD Guidelines to be an appropriate explanation and clarification of the principle described in Article 8b of the DCITA. Case Law The Netherlands has some specific case law regard - ing financial transactions, which involves a landmark case from 1988 (27 January 1988, No 23 919). The main conclusions were that intercompany loans can only be recharacterised as equity if they possess specific features, either being a loss-financing loan, a profit-participating loan or sham loan. The definitions of these kinds of loan have been precisely defined in case law. There seem to be relevant differences between this case law and the new Chapter 10 of the OECD TP Guidelines. The new transfer pricing decree recognises this difference, and it notes that if a tax - payer requests advance certainty on the application of the arm’s length principle, the OECD TP Guidelines will be taken as the starting point.
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