#TRANSFER PRICING POLICIES FREE#

This may be prepared in either the Dutch or English language. Dutch law requires companies that meet the threshold of €50 million of consolidated (global) group revenues, to prepare transfer pricing documentation (group master file and local file) in accordance with BEPS Action 13.There are no regulations dictating the form in which this document, however, it must include sufficient information to enable the DTA to evaluate the arm’s length nature of the transfer prices applied between related parties. The documentation must be included in the administration of the taxpayer. All Dutch entities, that transact with related parties, are obliged to prepare documentation that describes how transfer prices have been established and substantiate the at arm’s length nature of the transfer prices.The exact requirements for the preparation of transfer pricing documentation depend on the consolidated turnover of the multinational group to which the Dutch entity or branch belongs.This is one of the reasons why, in practice, the TNMM is often used as the transfer pricing method. Furthermore, the TP Decree indicates that in general, the comparable uncontrolled price method is difficult to apply in practice because comparable uncontrolled transactions are almost impossible to find.

#TRANSFER PRICING POLICIES FREE#

The taxpayer is in principle free to choose a transfer pricing method, provided that the chosen method leads to an arm’s length result for the specific transaction. The TP Decree indicates that the DTA will always start its transfer pricing investigation from the perspective of the method used by the taxpayer at the time of the transaction.Other methods can also be used if justifiable and appropriate. The current OECD methods, namely the comparable uncontrolled price, resale price, cost plus, transactional net margin, and profit split methods are all accepted but the method used must be in line with the functional and risk profile of the entity. According to the OECD TPG, the most appropriate transfer pricing method should be selected on a transaction by transaction basis, providing the most reliable measure of an arm’s length result in each case.The exact transfer pricing requirements depend on the consolidated turnover of the multinational group to which the Dutch company belongs. If the DTA requests the transfer pricing documentation, the taxpayer would typically have to provide it within a term of between 14 and 30 days.

Taxpayers are obliged to prepare transfer pricing documentation that describes how transfer prices have been established, substantiating the arm's length nature of the transfer prices.

The Dutch Tax Administration (DTA) deems transfer pricing adjustments necessary when a transaction is not considered to be at arm’s length.The TP rules apply to all Dutch taxpayers that are involved in cross-border intercompany transactions, including Dutch branches of foreign companies.The starting point of the arm’s length principle is that for tax purposes associated enterprises are assumed to act towards each other under the same conditions as independent companies would act under similar circumstances.The rules are not heavily formulaic but instead are principle-based. Furthermore, the transfer pricing regulations are based on the arm’s length principle as per Article 9 of the OECD Model Tax Convention on Income and Capital and nationally implemented in Article 8b of the Wet op de Vennootschapsbelasting 1969, ie it follows the OECD Transfer Pricing Guidelines (OECD TPG).

The Dutch transfer pricing (TP) legislation is included in the Dutch transfer pricing decree no.2018/6865 (TP Decree) with additional documentation regulations implemented through the Dutch decree DB/2015/462M (Documentation Decree).

Transfer pricing policies