NETHERLANDS TRENDS AND DEVELOPMENTS Contributed by: Jan-Willem Kunen, Natalie Reypens and Gijs van Koeveringe, Loyens & Loeff
The State Secretary informed the Dutch Parlia - ment that, even though the Netherlands remains in favour of an international agreement on Pillar One by means of an MLC, alternatives should be considered if a global agreement becomes less feasible. In this regard, the Netherlands would then prefer a European solution over a unilateral digital services tax. BEFIT On 12 September 2023, the European Commis - sion proposed a Council Directive on Business in Europe: Framework for Income Taxation (the “BEFIT Proposal” ). The BEFIT Proposal contains a common CIT framework for groups active in the EU. If adopted within the timeframe envis - aged by the Commission, EU member states must implement the BEFIT proposal by 1 Janu - ary 2028 and apply its provisions as of 1 July 2028. The BEFIT Proposal stipulates that in the first seven fiscal years post-implementation, trans - actions between entities that are subject to the BEFIT rules (ie, intra-BEFIT group transactions) are considered at arm’s length if they are con - sidered to be in “a low-risk zone” . The “low-risk zone” would cover the expense incurred/income earned by a BEFIT group member from an intra- BEFIT group transaction that increases by less than 10% compared to the average amount of the income or expense in the previous three fis - cal years. If this threshold is exceeded, the trans - action is presumed not to be consistent with the arm’s length principle, unless the BEFIT group member can provide evidence that the relevant intra-BEFIT group transaction was priced at arm’s length.
The State Secretary informed the Dutch Par - liament that the Netherlands expects BEFIT to increase compliance costs for tax authorities as well as for taxpayers, which would undermine BEFIT’s goal of decreasing the administrative burden for tax authorities and taxpayers. The Dutch parliament has therefore also requested the Dutch government not to vote in favour of BEFIT. As BEFIT will have a major administra - tive impact for MNEs with a European footprint and considering there is little support among EU member states, it remains highly uncertain whether EU member states will reach an agree - ment on the adoption of BEFIT. Concluding Remarks The Netherlands has seen several significant transfer pricing developments in 2024 and early 2025, with the further clarifications on the scope of the transfer pricing mismatch legislation, the implementation of Amount B and the implemen - tation of Public Country-by-Country Reporting legislation. Additionally, recent Dutch case law concerning transfer pricing further underlines the growing need for taxpayers to prepare and maintain comprehensive transfer pricing docu - mentation. Taxpayers are also advised to closely monitor ongoing European and broader interna - tional developments impacting the Dutch trans - fer pricing landscape, specifically developments coming from the OECD and EU.
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