NETHERLANDS TRENDS AND DEVELOPMENTS Contributed by: Jan-Willem Kunen, Natalie Reypens and Gijs van Koeveringe, Loyens & Loeff
the scope of Article 8bd of CITA. Additionally, the decree issued by the State Secretary on 24 January 2023 (the “8bd Decree” ) clarifies that capital contributions to, and distributions from, a Dutch entity by an entity not subject to profit taxation are not impacted by the transfer pricing mismatch legislation introduced in 2022, provid - ed that the fair market value is duly reflected in the relevant civil law documentation and annual accounts. In conjunction with the various advance tax rul - ings issued in the meantime, the KG Positions and the 8bd Decree provide valuable guidance and support to taxpayers regarding the interpre - tation of the scope of Article 8bd of CITA. Tax - payers may rely on this guidance for comparable cases and also as a basis for obtaining advance tax rulings to confirm the non-applicability of The Netherlands has experienced a significant increase in tax audits concerning transfer pricing over the past few years. These audits frequently target applied interest rates, business restruc - turings – including the onshoring of intellectual property – and the overall transfer pricing poli - cies of MNEs. Given the rising number of trans - fer pricing disputes, mechanisms for alternative dispute resolution and prevention are becoming increasingly important. To avoid discussions, taxpayers may consider entering into a (bilateral) advance pricing agree - ment (APA). Although there is no obligation for the competent authorities to reach an agreement on a bilateral APA, successful outcomes are in most cases reached by the Dutch competent authority. Article 8bd of CITA to other cases. Dispute Resolution and Prevention
Furthermore, taxpayers could end up in discus - sions with auditors upon the annual audit of their financial statements, including discussions on deferred tax assets and deferred tax liabilities. Auditors have tended to have become more critical of tax issues over recent years, so tax - payers should ensure they have sufficient sub - stantiation and documentation of their transfer pricing prior to the audit. With the introduction of Pillar Two, more discussions with auditors are expected due to the increased relevance of financial statements in determining potential Pil - lar Two tax liability. Internationally, discussions with tax auditors may lead to a mutual agreement procedure (MAP). The number of MAPs is expected to continue to increase, as transfer pricing discussions arise more frequently, and more MAPs are expected in order to limit the impact of the transfer pricing mismatch legislation. MAPs remain an attractive cross-border mechanism to resolve the double taxation that often results from a unilateral cor - rection by a tax authority, and one in which the Dutch competent authorities reach a resolution in most cases even without mandatory binding arbitration. Recent Relevant Dutch Case Law on Transfer Pricing Following the increase in transfer pricing audits, the Netherlands has also seen an increase in transfer pricing cases. Two recent transfer pric - ing cases, on business restructuring and share - holder loans, that could be relevant for the prac - tice are discussed below. Business restructuring case On 11 July 2024, the Dutch Court of Appeal (the “Court of Appeal” ) ruled on a transfer pricing dis - pute in relation to a business reorganisation from
282 CHAMBERS.COM
Powered by FlippingBook