Worldwide transfer pricing reference guide 2014

Netherlands
Taxing authority and tax law
Tax authority: Dutch Tax Administration (Belastingdienst)
Tax law:
• Tax authority Articles 3.8 and 3.25 of the Dutch Income Tax Act 2001
• Articles 8 and 8b of the Dutch Corporate Income Tax Act 1969
• Effective 1 January 2002, Article 8b codified the arm’s length principle and introduced transfer pricing documentation requirements in
the Netherlands
Relevant regulations and rulings
Besides the articles in Dutch tax law mentioned above, the Dutch Under-Minister of Finance issued several decrees in August 2004,
which both updated and expanded the decrees published in 2001, including adjustments and improvements in the rules for obtaining
advance certainty. These 2004 decrees provide more clarity on how the fiscal rules within the APA/Advance Tax Ruling (ATR) practice
should function. Another decree clarifies how the tax authority will treat certain issues regarding the application of the arm’s length
principle. In November 2013, the Dutch Under-Minister of Finance issued a new decree on transfer pricing and the application of the
arm’s length principle, which combines and replaces two previous decrees on transfer pricing (i.e., IFZ 2001/295M and IFZ 2004/680M).
This decree provides important insights into the Dutch tax administration’s position in applying the arm’s length principle in general and
into specific types of common intercompany transactions, such as financial transactions, captive insurance companies, (in)tangible fixed
assets, centralized procurement companies, and intercompany services. The decrees provide the tax authority’s formal position, but do
not legally bind the taxpayer.
The ten decrees published are:
• APA decree, IFZ2004/124M
• ATR decree, IFZ2004/125M
• Decree regarding financial service activities, IFZ2004/126M
• Questions and answers on the decree regarding service entities and grandfather regime ruling policy, IFZ2004/127M
• Decree on advance certainty and good faith versus treaty partners, DGB2004/1337M
• Decree on APAs, ATRs, financial services entities, interposed holdings, contact point potential foreign investors, organization and
competency rules, DGB2004/1338M
• Implementation decree regarding the Coordination Group Transfer Pricing, DGB2004/1339M
• Accelerated Mutual Agreement Procedure decree, IFZ2008/248M
• Decree on profit allocation to permanent establishments (PEs), IFZ2010/457M
• Decree on transfer pricing and the application of the arm’s length principle and the OECD Guidelines, IFZ 2013/184M
Additionally, it is expected that new guidance on the application of safe harbor rules on substance to group financing/licensing
companies and holding companies, and exchange of information will be issued.
OECD guidelines treatment
The tax authority generally follows the OECD Guidelines. Further guidance regarding the interpretation and application of the arm’s
length principle is provided by the Dutch transfer pricing decree (as published by the Under-Minister of Finance in the decree of
November 2013. According to this decree, the OECD Guidelines leave room for interpretation or require clarification on several issues.
The goal of the decree is to provide insight into the position of the tax authority regarding these issues.
The transfer pricing decree of November 2013 is an excellent source for transfer pricing guidance. It provides specific guidance on
intra-group services and shareholder activities, support services, contract research, cost contribution arrangements, arm’s length
price determination when the value at the time of the transaction is uncertain, financial transactions, captive insurance companies, (in)
tangible fixed assets, centralized purchasing companies and other topics. With respect to business restructurings, no specific guidance
has been issued to date. However, the tax authority generally follows the OECD guidance in this subject.
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