NETHERLANDS LAW AND PRACTICE Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar, Willem Koeleman and Bart-Jan Paardekooper, Borgen Tax
10. Relevance of the United Nations Practical Manual on Transfer Pricing 10.1 Impact of UN Practical Manual on Transfer Pricing Dutch TP legislation and decrees do not official - ly refer to the UN Practical Manual on Transfer Pricing. The UN Manual is, however, also based on the arm’s length principle and has the goal of making transfer pricing more understandable in practice. The DTA will therefore generally be open to explanations that are based on the UN Manual. 11. Safe Harbours or Other Unique Rules 11.1 Transfer Pricing Safe Harbours Low-value-adding services are a safe harbour. A mark-up of 5% may be applied for specific services without the generally required compa - rability study. The low-value-adding services doctrine of the OECD is referred to in the Dutch TP Decree. It thus applies to intercompany ser - vices that: • are of a supportive nature; • are not part of the core business of the MNE group (ie, not creating the profit-earning activities or contributing to the economically significant activities of the MNE group); • 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 substantial or significant risk by the service provider and do not give rise to the creation of significant risk for the service provider.
from the scope, such as the distribution of com - modities or digital goods. Amount B provides a pricing framework whereby a three-step process determines a return on sales for in-scope dis - tributors. Finally, the report also provides guid - ance on documentation, transitional issues, and tax certainty considerations. Last year, the Dutch government stated that it will not apply Amount B to domestic in-scope transactions. However, it accepts the applica - tion of Amount B by other jurisdictions classified as “covered jurisdictions” by the OECD. In such cases, the DTA will make corresponding adjust - ments to prevent double taxation, provided that: • the other jurisdiction is recognised as a cov - ered jurisdiction by the OECD; • the jurisdiction has implemented Amount B in its domestic legislation; and • a tax treaty exists between the Netherlands and the other jurisdiction. The Pillar One and Pillar Two rules will result in an increased administrative burden for taxpay - ers that fall under the scope of Pillar One and Pillar Two. In addition, the interaction between the Pillar One and Pillar Two systems and double tax treaties is still unclear, which could lead to uncertainty for taxpayers. The complexity and the different possible interpretations of the Pillar One and Pillar Two rules could lead to discus - sions with the DTA. 9.5 Entities Bearing the Risk of Another Entity’s Operations It is allowed for group companies to provide guarantees (eg, for bank loans). The pricing of the guarantees should be in line with the arm’s length principle and thus also with the accurate delineation of the transaction.
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