Worldwide transfer pricing reference guide 2014

Netherlands (continued)
APA opportunity (continued)
The Dutch tax authorities process many unilateral and bilateral APAs on annual basis. The Dutch competent authority has bilateral APA
experience across all continents.
Mutual agreement procedure
On 29 September 2008, a decree (IFZ2008/248M) describing the Mutual Agreement Procedure (MAP) process under bilateral treaties
and the EU Arbitration Convention was published. The decree aligns the MAP process in the Netherlands with the OECD Memorandum
on Effective Mutual Agreement Procedures (MEMAP), making the route to obtaining relief from double taxation more accessible and
transparent for taxpayers. Key features of the new decree are: formal introduction of an
Accelerated Competent Authority Procedure (ACAP); endorsement of arbitration to resolve MAP cases; targeting a reduction of MAP
related expenses; introducing transparency into the process by providing regular feedback and updates to the taxpayer; encouraging use
of Article 9(2) of the OECD Model Tax Convention (MTC); commitment to tackle resolution of double taxation in cases ‘‘not provided for in
the Convention’’ (Article 25(3) of the OECD MTC) in addition to the more traditional double taxation cases.
Attribution of profits to permanent establishments
On 27 January 2011, a decree was published in the Government Gazette concerning the attribution of profits to permanent
establishments (PE Decree). This PE Decree provides further insights into tax authority’s position on permanent establishments;
following the publication of the 2010 OECD Report on the Attribution of Profits to Permanent Establishments (PE Report) and the
OECD work on article 7 of the OECD MTC, including commentary, in recent years. The PE Decree, effective as of 28 January 2011,
provides that the Dutch policy concurs with the conclusions established in the PE Report. Furthermore, it clarifies the tax authority’s
position regarding the dynamic approach to interpreting tax treaties, the preference for the capital allocation approach when allocating
“free” capital to a permanent establishment, the preference for the fungibility approach when allocating the amount of interest,
certain issues regarding dealings involving group services, intangible assets and financial assets, and certain specific topics, including
advance certainty.
Expected reaction to OECD Report on BEPS
The Dutch Under-Minister of Finance recognizes the importance of the current initiatives of the OECD to counter BEPS. Nevertheless,
he emphasizes the importance of addressing BEPS in a multi-lateral context. As a first step a new Decree entered into force as of
1 January 2014, which codifies the existing administrative guidance on substance requirements for companies engaged in intermediary
financing and/or licensing activities. Dutch companies that claim the benefits of a tax treaty or EU Directive
(treaty benefits) should now declare in their annual Dutch corporate income tax return whether or not the taxpayer meets a defined set
of substance requirements.
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