NETHERLANDS Law and Practice Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar and Willem Koeleman, Borgen Tax
Two systems and double tax treaties is still unclear, which could lead to uncertainty for taxpayers. The complexity and the different possible interpretations of the Pillar One and Pillar Two rules could lead to
In the second step, the profits of the permanent estab - lishment are determined on an arm’s length basis. The State Secretary prefers the fungibility approach in relation to interest expense that need to be allocated. In treaty situations, profit attribution follows the rele - vant treaty provision, while in non-treaty situations it is aligned with the latest version of Article 7 of the OECD Model Tax Convention, making the OECD Commen - tary and the PE Report key interpretative sources. The recent 2025 update to the OECD Commentary in relation to PEs should be considered in relation to treaty situations, where it is deemed relevant. 10. Relevance of the United Nations Practical Manual on Transfer Pricing 10.1 Impact of UN Practical Manual on Transfer Pricing Dutch TP legislation and decrees do not officially refer to the UN Practical Manual on Transfer Pricing. The UN Manual is, however, also based on the arm’s length principle and has the goal of making transfer pricing more understandable in practice. The DTA will therefore generally be open to explanations that are based on the UN Manual. 11. Safe Harbours or Other Unique Rules 11.1 Transfer Pricing Safe Harbours Low-value-adding services are a safe harbour. A mark-up of 5% may be applied for specific services without the generally required comparability study. The low-value-adding services doctrine of the OECD is referred to in the Dutch TP Decree. It thus applies
discussions with the DTA. 9.5 Pillar One Amount B
The Netherlands has implemented Amount B in the form of a Decree (Amount B Decree 2025, BWBR0050664). Although Amount B will not be introduced for rou - tine marketing and distribution activities performed in the Netherlands, it may still be relevant for Dutch taxpayers where it is applied abroad. The Netherlands has committed to accepting the outcomes of a cor - rect application of Amount B by covered jurisdictions and, where applicable, to eliminating double taxation through corresponding adjustments or mutual agree - ment procedures, both for related-party transactions and for profit attribution to permanent establishments. Generally, in relation to countries within Europe, these rules will not affect Dutch taxation. 9.6 Entities Bearing the Risk of Another Entity’s Operations Group companies are allowed to provide guarantees (eg, for bank loans). The pricing of the guarantees should be in line with the arm’s length principle and thus also with the accurate delineation of the trans - action. 9.7 Allocation of Profits to Permanent Establishments (PEs) The Dutch legislature is aligning the profit attribution of PEs with the Authorised OECD Approach (AOA). However, additional guidance and interpretations to this approach have been provided by the State Secre - tary in the Decree Profit Allocation Permanent Estab - lishments 2022 (State Gazette No 2022, 16683). Dutch policy on profit attribution to permanent estab - lishments aligns with the conclusions of the OECD PE Report. Profit attribution is based on the AOA, under which assets, risks and capital are first allocated to the permanent establishment through a functional analysis, with a preference for the capital allocation approach, under the assumption that the permanent establishment has a creditworthiness comparable to the enterprise.
to intercompany services that: • are of a supportive nature;
• are not part of the core business of the MNE group (ie, not creating the profit-earning activities or con - tributing to the economically significant activities of the MNE group);
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