NETHERLANDS Law and Practice Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar and Willem Koeleman, Borgen Tax
• do not require the use of unique and valuable intangibles and do not lead to the creation of unique and valuable intangibles; and • do not involve the assumption or control of sub - stantial or significant risk by the service provider and do not give rise to the creation of significant risk for the service provider. There is also a safe harbour for back-to-back financial transactions that are conducted by limited risk intra- group service providers. The equity at risk relating to these transactions should be at least 1% of the loan volume or EUR2 million. This serves as a de facto safe harbour, although benchmark studies are required to determine the pricing. This specific policy is currently being investigated by the government. The proposed European Anti-Tax Avoidance Directive III (“ATAD 3”), which targets misuse of shell companies, may speed up this process. 11.2 Rules on Savings Arising From Operating in the Jurisdiction The OECD Transfer Pricing Guidelines consider loca - tion savings as a comparability factor. The Nether - lands follows the OECD Transfer Pricing Guidelines for the application of the arm’s length principle and the guidance concerning location savings. There are no specific domestic rules. 11.3 Unique Transfer Pricing Rules or Practices Since the Netherlands follows the OECD Transfer Pric - ing Guidelines, no other unique rules are applicable in the transfer pricing context. Although one should consider the recently introduced transfer pricing mismatch legislation that is covered in 1.2 Current The Netherlands has specific regulations govern - ing financial transactions as outlined in the Dutch TP Decree. This Decree aligns with Chapter X of the OECD Transfer Pricing Guidelines, focusing on finan - cial transactions within multinational enterprises. There are several focus points of the DTA regarding financial transactions. For example, the decree spe - cifically explains how to deal with: Regime and Recent Changes . 11.4 Financial Transactions
• loans; • debt capacity analysis; • financial service entities; • cash pooling; and • guarantees.
12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation While there is no operational co-ordination between the Dutch customs authorities and the DTA, since these are separate organisations, they co-operate closely if required on a case-by-case basis. 13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies Controversy Process In the event of a tax controversy, the DTA initially attempts to enter discussions. A taxpayer will be given the opportunity to explain how their transfer pricing policy works and to provide additional relevant infor - mation. Court proceedings only occur if no common ground can be found during these discussions and if the case is considered sufficiently important for the DTA from both a technical and a financial perspective. In principle, a transfer pricing dispute does not dif - fer from any other dispute between tax authorities and taxpayers. Eventually, the inspector will or will not make a correction and this can be challenged in an objection to the DTA and in subsequent appeal proceedings. After the taxpayer has objected to the DTA, the tax - payer can make an appeal before a district court. After the district court has issued a judgment, an appeal can be initiated with the Court of Appeal and then with the Dutch Supreme Court.
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