NETHERLANDS LAW AND PRACTICE Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar, Willem Koeleman and Bart-Jan Paardekooper, Borgen Tax
3.5 Comparability Adjustments The Netherlands requires comparability adjust - ments if necessary. The Netherlands follows the OECD TP Guidelines and applies the OECD approved methods. In paragraphs 3.47 and fol - lowing, the comparability adjustments are dis - cussed. Paragraph 3.50 elaborates that compa - rability adjustments should only be considered if they are expected to increase the reliability of the results of a benchmark study. According to the state secretary of finance the value of intangible assets can be calculated by determining the arm’s length remuneration for the least complex entities, based on the resale price method, the cost-plus method or the TNMM method. The residual profit should then be divided between the entities performing the entrepreneurial functions, in relation to the IP. Depending on the facts and circumstances, the various development, enhancement, main - tenance, protection and exploitation (DEMPE) functions will have to be weighed in relation to their relative importance. In general, the devel - opment and enhancement functions will be given greater weight in assessing the relative contributions to the value of the intangible asset concerned. 4. Intangibles 4.1 Notable Rules The TP Decree also covers the purchase of shares in an unrelated company followed by a business restructuring and the determina - tion of a fee for the use of intangible assets. If the value of the transferred intangible assets is determined, the value of the intangible assets for both the seller and buyer should be taken into account, thus applying the two-sided approach.
4.2 Hard-to-Value Intangibles It is possible that there are large deviations between the actuals after an IP transaction and the five-year forecasts that formed the basis for the price determination at the time of the trans - action. In that case, the DTA may retrospectively reassess the transfer price that was determined at the time of the transaction, according to the TP Decree. This can only happen if these devia - tions (which must be of more than 20%) cannot be explained by new facts and circumstances. 4.3 Cost Sharing/Cost Contribution Arrangements For cost-sharing or cost contribution arrange - ments (CCAs), the arm’s length principle as elab - orated in the OECD Guidelines and, in particu - lar, Chapter VIII of the OECD Guidelines should be followed. Under the arm’s length principle, remuneration should be related to the functions performed (taking into account the risks incurred and assets used). This means that the level of remuneration of the participants in a CCA may not differ (substantially) from the remuneration that the companies concerned would receive if they were co-operating outside a CCA context. This means, for example, that a participant in a CCA that assumes risks must also exercise control over these risks and have the financial capacity to bear the negative impact of these risks. A participant in a CCA, which only provides financing for the CCA and only exercises control over risks related to that financing and not the risks related to other activities within the CCA, is generally only entitled to an arm’s length fee for the financing, taking into account the financ - ing risk.
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