NETHERLANDS TRENDS AND DEVELOPMENTS Contributed by: Jan-Willem Kunen, Natalie Reypens and Gijs van Koeveringe, Loyens & Loeff
MNE publishes the Country-by-Country Report on its own website and the aforementioned rel- evant criteria are met. An MNE no longer has to publicly disclose a Country-by-Country Report when its consolidated revenues cease to exceed EUR750 million over a period of two consecutive financial years. As opposed to the definitions used by the OECD for Country-by-Country Reporting purposes, the Public CbCR Decree lacks some clarity with respect to the definition of an “MNE” (ie, OECD Country-by-Country Reporting explicitly indicates that affiliated undertakings that are excluded from the consolidated group based on size or materiality grounds should be consid - ered a subsidiary for public Country-by-Country Reporting purposes) and use of conversion rates (ie, OECD Country-by-Country Reporting refers to January 2015). It should therefore be verified to what extent a Dutch ultimate parent undertak - ing, a Dutch medium-sized or large subsidiary, or a Dutch branch is required to publicly disclose a Country-by-Country Report on its own website and which conversion rate should be used. International Developments Impacting the Dutch Transfer Pricing Landscape The proposal for an EU Directive on Transfer Pricing On 12 September 2023, the European Commis - sion released a legislative proposal for a Coun - cil Directive that integrates key transfer pricing (TP) principles into EU law (TP Proposal). The TP Proposal seeks to harmonise TP norms within the EU through the incorporation of the arm’s length principle into EU law and the clarifica - tion of the role and status of the 2022 TPG. To ensure a common application of the arm’s length principle, the TP Proposal provides that the 2022 version of the TPG is binding when applying the arm’s length principle in EU member states.
The current Dutch government sees the inclu - sion of the arm’s length principle in EU legislation as a step in the right direction, but is not positive about the way this has been incorporated in TP Proposal. The Dutch government agrees with the TP Proposal that the TPG provide the most appropriate interpretation of the arm’s length principle. However, they question whether a common application of the arm’s length principle is achieved when interpretations are confined to EU legislation alone. In addition, the Dutch gov - ernment has stated that the TP Proposal seems to hold EU member states responsible for ensur - ing that transactions are in line with the arm’s length principle. Instead, the Netherlands would prefer the TP Proposal to require that taxpay - ers themselves carry the primary responsibility for ensuring that cross-border transactions are entered into in accordance with the arm’s length principle. In view of the above Dutch reservations and those of other EU member states, the TP Propos - al has not yet gathered sufficient support from EU member states. Instead, other non-legislative options are currently being explored to improve co-operation on transfer pricing practices at an EU level. Such options include the possibility of setting up a transfer pricing platform outside the framework of a Council Directive. The Dutch government has stated that it supports these developments. Pillar One – Amount A Pillar One’s Amount A seeks to create a new taxing right for market jurisdictions, which will be independent of the physical presence requirement and determined using a formulaic approach. Although having come close to a final agreement, the Multilateral Convention (MLC) text released on 11 October 2023 is still not open for signature yet.
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