NETHERLANDS LAW AND PRACTICE Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar, Willem Koeleman and Bart-Jan Paardekooper, Borgen Tax
1. Rules Governing Transfer Pricing 1.1 Statutes and Regulations The arm’s length principle and the Dutch transfer pricing documentation requirements are codi - fied in Article 8b of the Dutch Corporate Income Tax Act (DCITA). For multinational enterprises (MNEs) with an annual consolidated revenue below EUR50 million, the documentation is free of specific formal requirements, but should be appropriate to substantiate the arm’s length character of the pricing. Master file and local file documentation and country-by-country report - ing (CbCR) requirements are codified in Article 29b–29h of the DCITA. Master file/local file doc - umentation is applicable to multinationals with consolidated annual turnover exceeding EUR50 million, whereas CbCR requirements have a rev - enue threshold of EUR750 million. Local files should be updated on an annual basis, while benchmark studies should be updated once every three years, assuming there are no rel - evant changes to the business model. In addition, the state secretary of finance has issued several decrees that involve transfer pric - ing. The most relevant of these are: • Stcrt No 2023, 2621, providing guidance on Article 8bd of the DCITA; • Stcrt No 2023, 25745, on rulings with an international character; • Stcrt No 2022, 16685, on the application of the arm’s length principle and the OECD Transfer Pricing Guidelines; • Stcrt No 2022, 16683 providing guidance on how the Dutch Tax Authority (DTA) attributes profits to permanent establishments; • Stcrt No 2020, 32689, on mutual agreement procedures (MAPs); • Stcrt No 2019, 66184, which provides guid - ance on penalties with respect to CbCR; and
• Stcrt No 2015, 47457, providing guidance on the transfer pricing documentation require - ments. The decree Stcrt No 2019, 13003, providing guid - ance on the renewed advance pricing agreement (APA) practice of the DTA was amended with the decree Stcrt No 2023, 25745 in December 2023. The decrees are not laws – nevertheless they are binding for the tax authorities. Furthermore, Dutch transfer pricing legislation is based on the OECD Transfer Pricing (TP) Guidelines. 1.2 Current Regime and Recent Changes History of Transfer Pricing Rulings in the Netherlands Before 2002, the arm’s length principle was not explicitly included in the DCITA. It was under - stood, however, that it was already applicable through general principles regarding profit deter - mination, which were enacted in Article 8 of the DCITA. The arm’s length principle was only enacted in Dutch law in 2002. Until then, some perceived there was insufficient clarity on how to apply the arm’s length principle, as also concluded in the decision of the Court of Appeal of ‘s-Hertogen - bosch on 20 June 2000. At that time, there was also international pressure on the Netherlands to clarify its position. Due to these developments, the arm’s length principle was codified in Article 8b of the DCITA in 2002. In decree Stcrt No 2015/47457, further guid - ance was provided with regard to the contents of transfer pricing documentation. This concerns the contents of the master file, local file and the CbCR. The requirements are applicable for fis - cal years starting 1 January 2016 onwards. With these documentation requirements, the Nether -
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