NETHERLANDS Law and Practice Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar and Willem Koeleman, Borgen Tax
New Decree Lastly, a new decree has removed the approved policy to charge only the relevant actual costs in the case of low-value-added services. This is replaced by a brief reference to the OECD TP Guidelines, in which the option to re-charge on a cost basis can still be applied. This probably implies that the DTA will have a less flexible stance on remunerating low-value-added services on a cost basis. 9.2 Arm’s Length Principle The arm’s length principle is the leading principle for transfer pricing purposes. The principle is also codi - fied in Dutch tax law. There are no circumstances in which another principle would be applicable. In parlia - mentary history it is stipulated that, in the Netherlands, taxable profit is determined based on the arm’s length principle in accordance with the interpretation agreed within the OECD. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project The Dutch interpretation of the arm’s length princi - ple has not changed significantly following the BEPS project, as indicated in the TP Decree. The documen - tation standards have, however, become more exten - sive. The TP team of the DTA has grown over time and there has therefore been an increase of TP audits or questionnaires. 9.4 Impact of BEPS 2.0 The Netherlands has consistently supported the Pil - lar One and Pillar Two proposals and continues to support their swift implementation. As of 2024 the Netherlands has implemented the Minimum Tax Act, stipulating that all companies with global revenues exceeding EUR750 million must pay a minimum tax at a 15% effective rate. This is achieved through a top-up tax on profits made in other countries or inclusion in the Dutch tax base of payments that are made to countries if they are not taxed enough. Pillar One – Amount B In October 2021, the OECD’s Inclusive Framework on BEPS agreed on Amount B to simplify and stream - line the application of the arm’s length principle to
in-country baseline marketing and distribution activi - ties, with a particular focus on the needs of low- capacity jurisdictions. Following that mandate, the report contains guidance on “Special considerations for baseline distribution activities” that is incorporated into the OECD Transfer Pricing Guidelines for Multi - national Enterprises and Tax Administrations 2022 as an Annex to Chapter IV. The simplified and stream - lined approach set out in that guidance is expected to enhance tax certainty and to relieve compliance burdens for taxpayers and tax administrations alike, particularly those in low-capacity jurisdictions facing limited resources. Jurisdictions can choose to apply the simplified and streamlined approach to qualifying transactions of eligible baseline distributors. The guidance in this report sets out the characteristics of in-scope dis - tributors, which cannot, for example, assume certain economically significant risks or own unique and value intangibles. Moreover, certain activities may exclude a distributor from the scope, such as the distribution of commodities or digital goods. Amount B provides a pricing framework whereby a three-step process determines a return on sales for in-scope distribu - tors. Finally, the report also provides guidance on documentation, transitional issues, and tax certainty considerations. Last year, the Dutch government stated that it will not apply Amount B to domestic in-scope transactions. However, it accepts the application of Amount B by other jurisdictions classified as “covered jurisdictions” by the OECD. In such cases, the DTA will make cor - responding adjustments to prevent double taxation, provided that: • the other jurisdiction is recognised as a covered jurisdiction by the OECD; • the jurisdiction has implemented Amount B in its domestic legislation; and • a tax treaty exists between the Netherlands and the other jurisdiction. The Pillar One and Pillar Two rules will result in an increased administrative burden for taxpayers that fall under the scope of Pillar One and Pillar Two. In addi - tion, the interaction between the Pillar One and Pillar
172 CHAMBERS.COM
Powered by FlippingBook