NETHERLANDS LAW AND PRACTICE Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar, Willem Koeleman and Bart-Jan Paardekooper, Borgen Tax
8. Penalties and Documentation 8.1 Transfer Pricing Penalties and Defences In practice, the DTA does not usually impose penalties in transfer pricing cases. Under the law it may, however, decide to impose penalties for not having the required TP documentation available when due, or for non-compliance with For intentionally not having the documentation ready when required, imprisonment for up to six months or a fine of up to EUR10,300 can be imposed (Article 52 and 68 of the General Tax Law ( Algemene wet inzake rijksbelastingen ), Arti - cle 23(4) of the Dutch Penal Code). The fine can be higher when not having the documentation leads to under-levied tax for a higher amount. It is, however, unlikely that the tax authorities will impose imprisonment. CbCR obligations. TP Documentation For non-standardised TP documentation for small and medium-sized enterprises (consoli - dated annual revenue below EUR50 million), the obligations are less strict. The DTA’s policy is to grant the taxpayer a reasonable period of time to hand in appropriate TP documentation. The reasonable period of time is generally four to six weeks. Master file/local file documentation, on the other hand, is in principle due upon request, if the applicable corporate income tax return fil - ing deadlines have passed. Country-by-Country Reporting Based on Article 29h(1) of the DCITA, the taxpay - er may receive an administrative fine for deliber - ate or grossly negligent failure to comply with the obligation to submit a country-by-country (CbC) report or to file a notification that another group entity will file the report. The administra -
If a taxpayer does not provide the required infor - mation, an APA request can be denied. 7.5 APA Application Deadlines In the Netherlands, there is no formal deadline for submitting an APA request. However, it is not possible to include fiscal years for which a tax return has already been filed under an APA. 7.6 APA User Fees No filing fees have to be paid for requesting and/ or obtaining an APA. 7.7 Duration of APA Cover The taxpayer shall, first of all, indicate the period for which the APA is requested. In principle, the ruling will be valid for a maximum of five fiscal years. If the facts and circumstances justify an exception – for example, in the case of long- term contracts – a maximum term of ten financial years may be applied, with at least an interim review after five years. 7.8 Retroactive Effect for APAs An APA can have limited retroactive effect upon request, provided that the facts and circum - stances have not changed since the period for which the taxpayer is requesting an APA and that the retroactive effect does not result in a lower taxable profit which is ultimately not taxed anywhere. For multilateral or bilateral APAs a roll-back is possible if all the countries involved agree that it is the correct application of the arm’s length principle and if they process this application accordingly. Again, it may not lead to profit that remains untaxed.
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