NETHERLANDS LAW AND PRACTICE Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar, Willem Koeleman and Bart-Jan Paardekooper, Borgen Tax
lands implemented the outcome of Action Plan 13 of the OECD BEPS project commissioned by the G20. In 2023, a decree on rulings with an international character was published. This decree, among other things, ensures that in situations where there is a so-called triangular case in a bilateral or multilateral APA, a critical assumption can be included that takes into account transfer pricing adjustments from countries that are not involved in the bilateral or multilateral APA. Furthermore, a decree concerning MAPs pub - lished in 2020 includes the adoption of a mini - mum international standard for dispute resolu - tion in Action Plan 14 of the OECD BEPS project. The latest Dutch TP Decree (Stcrt No 2022, 16685) was published on 1 July 2022. The most significant adjustments in the decree are Section 2 on government support measures, Section 6 on intragroup services, and Section 9 on finan - cial transactions. Furthermore, there are some textual changes in the terminology in order to align with the OECD TP Guidelines and Dutch law and regulation. There is also an updated decree regarding Arti - cle 8bd of the DCITA, which provides further guidance on this article with regard to practical matters. Lastly, the Netherlands has implemented Pillar 2 legislation and acknowledged the implemen - tation of Pillar 1 legislation. See 9.4 Impact of BEPS 2.0 for further discussion. Transfer Pricing Mismatches Legislation As of 1 January 2022, new legislation in the Netherlands addresses transfer pricing mis - matches through Articles 8ba, 8bb, 8bc, 8bd,
and 35 of the DCITA. This legislation is aimed at eliminating transfer pricing mismatches that result from differences in the foreign application of the arm’s length principle, which can lead to double non-taxation. Previously, the Netherlands applied the arm’s length principle under Article 8b of the DCITA. The foreign treatment of transactions was gener - ally irrelevant to Dutch tax positions, although, since mid-2019, it has not been possible to obtain tax rulings when international mismatch - es lead to tax benefits. However, these limita - tions on rulings did not affect positions declared in corporate income tax returns without a ruling. The amended Articles mean that it is no longer possible to deduct additional costs or to incur additional depreciation on an asset in the Neth - erlands if the actual commercial price was dif - ferent (lower in the case of depreciation or costs incurred, and higher in the case of income) and the tax adjustment is not followed in the involved foreign jurisdiction; ie, there is no pick-up. The transfer pricing mismatches legislation therefore applies where a tax to commercial difference is taken into account that exists because of a dif - ferent foreign application of the arm’s length principle in a transaction. The legislation targets, among other things, so-called informal capital or deemed dividend structures. Examples Two main examples are summarised below. • A Dutch company obtains a loan from a for - eign-affiliated company with an agreed inter - est rate of 0%. An arm’s length interest rate would be 5%. Based on previous Dutch legis - lation (or the DCITA) the arm’s length interest rate should be deducted for tax purposes. With the current legislation, the possibility of
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