NETHERLANDS LAW AND PRACTICE Contributed by: Jimmie van der Zwaan, Rob Langeveldt, Vasisthà Parmessar, Willem Koeleman and Bart-Jan Paardekooper, Borgen Tax
There is also a safe harbour for back-to-back financial transactions that are conducted by lim - ited risk intra-group service providers. The equi - ty at risk relating to these transactions should be at least 1% of the loan volume or EUR2 million. This serves as a de facto safe harbour, although benchmark studies are required to determine the pricing. This specific policy is currently being investigated by the government. The proposed European Anti-Tax Avoidance Directive III ( “ATAD 3” ), which targets misuse of shell companies, may speed up this process. 11.2 Rules on Savings Arising From Operating in the Jurisdiction The OECD Transfer Pricing Guidelines consider location savings as a comparability factor. The Netherlands follows the OECD Transfer Pricing Guidelines for the application of the arm’s length principle and also the guidance concerning loca - tion savings. There are no specific domestic rules. 11.3 Unique Transfer Pricing Rules or Practices Since the Netherlands follows the OECD Trans - fer Pricing Guidelines, no other unique rules are applicable in the transfer pricing context. Although one should take into account the recently introduced transfer pricing mismatch legislation that is covered in 1.2 Current Regime and Recent Changes. 11.4 Financial Transactions The Netherlands has specific regulations gov - erning financial transactions as outlined in the Dutch TP Decree. This Decree aligns with Chapter X of the OECD Transfer Pricing Guide - lines, focusing on financial transactions within multinational enterprises. There are a number of focus points of the DTA regarding financial
transactions. For example, the decree specifi - cally explains how to deal with: • loans;
• debt capacity analysis • financial service entities; • cash pooling; and • guarantees.
12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation While there is no operational co-ordination between the Dutch customs authorities and the DTA, since these are separate organisations, they co-operate closely if required on a case- by-case basis. 13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies Controversy Process In the event of a tax controversy, the DTA ini - tially attempts to enter into discussions. A tax - payer will be given the opportunity to explain how their transfer pricing policy works and to provide additional relevant information. Court proceedings only occur if no common ground can be found during these discussions and if the case is considered sufficiently impor - tant for the DTA from both a technical and a financial perspective. In principle, a transfer pricing dispute does not differ from any other dispute between tax author -
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