Transfer Pricing 2024 Comparisons

Last Updated April 19, 2024

Contributed By Taxand Netherlands

Law and Practice


Taxand Netherlands is an Amsterdam-based independent advisory firm offering a full range of tax advisory and compliance services (including VAT, wage tax, M&A, international and European tax law, corporate income tax, real estate and transfer pricing). Its focus is on tax disputes and transactions, nationally and internationally. The firm consists of over 25 seasoned tax professionals and is part of Taxand Global, a network with tax law firms in nearly 50 countries. This allows it to offer high-quality and integrated tax advice worldwide. The transfer pricing team at Taxand Netherlands helps clients to prepare and maintain appropriate transfer pricing documentation, including benchmark studies. The team also assists clients with business restructurings, (bilateral) advance pricing agreements with the tax authorities, and transfer pricing audits or disputes.

The arm’s length principle and the Dutch transfer pricing documentation requirements are codified in Article 8b of the Dutch Corporate Income Tax Act (DCITA). For multinational enterprises (MNEs) with an annual consolidated revenue below EUR50 million, the documentation is free of form, but should be appropriate to substantiate the arm’s length character of the pricing. Master file and local file documentation and country-by-country reporting (CbCR) requirements are codified in Article 29b–29h of the DCITA. Master file/local file documentation is applicable to multinationals with a consolidated annual turnover exceeding EUR50 million, whereas CbCR requirements have a revenue threshold of EUR750 million. Local files should be updated on an annual basis, while benchmark studies should be updated once every three years, assuming there are no relevant changes to the business model.

In addition, the state secretary of finance has issued several decrees that involve transfer pricing. The most relevant of these are:

  • Stcrt No 2023, 2621, providing guidance on Article 8bd of the DCITA;
  • Stcrt No 2023, 25745, on rulings with an international character;
  • Stcrt No 2022, 16685, on the application of the arm’s length principle and the OECD Transfer Pricing Guidelines;
  • Stcrt No 2022, 16683 providing guidance on how the Dutch Tax Authority (DTA) attributes profits to permanent establishments; 
  • Stcrt No 2020, 32689, on mutual agreement procedures (MAPs);
  • Stcrt No 2019, 66184, which provides guidance on penalties with respect to CbCR; and
  • Stcrt No 2015, 47457, providing guidance on the transfer pricing documentation requirements.

The decree Stcrt No 2019, 13003, providing guidance on the renewed advance pricing agreement (APA) practice of the DTA was amended with the decree Stcrt No 2023, 25745 in December 2023.

The decrees are not laws – nevertheless they are binding for the tax authorities. Furthermore, Dutch transfer pricing legislation is based on the OECD Transfer Pricing (TP) Guidelines.

Before 2002, the arm’s length principle was not explicitly included in the DCITA. It was understood, however, that it was already applicable through general principles regarding profit determination, which were enacted in Article 8 of the DCITA.

The arm’s length principle was only enacted in Dutch law in 2002. Until then, some perceived there was insufficient clarity on how to apply the arm’s length principle, as also concluded in the decision of the Court of Appeal’s-Hertogenbosch on 20 June 2000. At that time, there was also international pressure on the Netherlands to clarify its position. Due to these developments, the arm’s length principle was codified in Article 8b of the DCITA in 2002.

In decree Stcrt No 2015/47457, further guidance was provided with regard to the contents of transfer pricing documentation. This concerns the contents of the master file, local file and the CbCR. The requirements are applicable for fiscal years starting 1 January 2016 onwards. With these documentation requirements, the Netherlands implemented the outcome of Action Plan 13 of the OECD BEPS project commissioned by the G20.

In 2023, a decree on rulings with an international character was published. This decree, among other things, ensures that in situations where there is a so-called triangular case in a bilateral or multilateral APA, a critical assumption can be included that takes into account transfer pricing adjustments from countries that are not involved in the bilateral or multilateral APA.

Furthermore, a decree concerning MAPs published in 2020 includes the adoption of a minimum international standard for dispute resolution in Action Plan 14 of the OECD BEPS project.

The latest Dutch TP Decree (Stcrt No 2022, 16685) was published on 1 July 2022. This update of the decree addresses the impact of the COVID-19 pandemic. The most significant adjustments in the decree are Section 2 on government support measures, Section 6 on intragroup services, and Section 9 on financial transactions. Furthermore, there are some textual changes in the terminology in order to align with the OECD TP Guidelines and Dutch law and regulation.

Lastly, there is also an updated decree regarding Article 8bd of the DCITA, which provides further guidance on this article with regard to practical matters.

Transfer Pricing Mismatches Legislation

Since 1 January 2022, new legislation has come into force in the Netherlands to target transfer pricing mismatches, introducing new Articles (8ba, 8bb, 8bc, 8bd and 35) to the DCITA. The purpose of the legislation is to eliminate transfer pricing mismatches that arise as a result of a different foreign application of the arm’s length principle, which results in double non-taxation.

Currently the arm’s length principle is applied in the Netherlands (Article 8b, DCITA). The foreign treatment of transactions has, in principle, been irrelevant to the Dutch position, although since mid-2019 it has no longer been possible to obtain rulings when a tax benefit exists because of an international mismatch. This does not, however, impact the positions taken in the corporate income tax return without a ruling. 

With the new articles it is no longer possible to deduct additional costs or to incur additional depreciation on an asset in the Netherlands if the actual commercial price was different (lower in the case of depreciation or costs incurred, and higher in the case of income) and the tax adjustment is not followed in the involved foreign jurisdiction; ie, there is no pick-up. The transfer pricing mismatches legislation therefore applies where a tax to commercial difference is taken into account that exists because of a different foreign application of the arm’s length principle in a transaction. The new legislation targets, among other things, so-called informal capital or deemed dividend structures.


Two main examples are summarised below. 

  • A Dutch company obtains a loan from a foreign-affiliated company with an agreed interest rate of 0%. An arm’s length interest rate would be 5%. Based on Dutch legislation (or the DCITA) the arm’s length interest rate should be deducted for tax purposes. With the new legislation, the possibility of deduction depends on whether the foreign legislation requires a corresponding adjustment; ie, including the arm’s length interest of 5% as taxable income. If this is not the case, the 5% interest may no longer be deducted in the Netherlands. Conversely, this also applies to loans from a Dutch company to a foreign affiliate – where the arm’s length interest is higher than the commercial interest charged, the foreign affiliate will be able to deduct the arm’s length interest for tax purposes.
  • A Dutch company acquires an asset (eg, an intangible asset) for a price of 75, while an arm’s length price would have been 200. Based on the existing legislation, the asset should be booked on the tax balance sheet for an amount of 200 and depreciated accordingly. While with the proposed legislation, this depends on whether the arm’s length price is reported as taxable income. If the foreign country only taxes 75 as income, the Dutch company should book the asset on its tax balance sheet for the same amount and may only depreciate the asset accordingly if appropriate. Regarding this example, the legislation can also affect transactions that have already taken place, as well as taxable income in the Netherlands from 2022 onwards. This relates to assets that have been acquired from affiliated companies since mid-2019, that were depreciated in 2022 and afterwards, in this way matching the changes to the Dutch ruling practice.

The legislation does not take into account at what rate the income is taxed in the foreign country, a zero rate could therefore avoid application of the legislation.

Associated Enterprises in Dutch Tax Law

Transfer pricing is only relevant for transactions between associated enterprises. In Dutch tax law, the term “associated enterprise” is defined in Article 8b(1) and (2) of the DCITA. Parliamentary history indicates that the definition of the term “associated enterprise” in Article 9 of the OECD Model Convention was followed.

Pursuant to Article 8b of the DCITA, an enterprise is an associated enterprise if:

  • it participates, directly or indirectly, in the management, control or capital of another enterprise; or
  • the same taxpayer participates, directly or indirectly, in the management, control or capital of two enterprises.

The degree of participation in the management, control or capital are not elaborated in the DCITA. In the explanatory memorandum to the legislative proposal it is specified that the shareholder, supervisor and/or director have sufficient control to be able to exert influence with regard to the determination of the prices for transactions that take place between the entities involved. It is intended that the term “associated enterprises” be interpreted broadly, for which reason there is no percentage threshold. As a result, it is relatively easy to be in scope.

Chapter II of the OECD Guidelines discusses the three traditional transaction methods – the comparable uncontrolled price (CUP) method, the resale price method and the cost-plus method – and the two transactional-profit methods – the profit-split method and the transactional net margin method (TNMM). Depending on the circumstances, a choice should be made from one of these five acceptable methods.

According to the Dutch TP Decree (Stcrt No 2022-16685), the DTA will always start its transfer pricing analysis from the perspective of the method used by the taxpayer. The taxpayer is, in principle, free to choose any transfer pricing method, provided that the chosen method leads to an arm’s length outcome for the specific transaction in view of the relevant facts and circumstances. Furthermore, the taxpayer is not obliged to use multiple methods. The taxpayer has to substantiate their choice of method. The TP Decree does acknowledge that a CUP is often difficult to find and that therefore the TNMM will be applied in many cases, while the OECD TP Guidelines include a preference for the CUP method.

In principle, a taxpayer has to choose one of the five acceptable OECD methods discussed in 3.1 Transfer Pricing Methods. It is up to the taxpayer to select an appropriate method. In the parliamentary history, a reference has been made to paragraph 2.9 of the OECD TP Guidelines, where it is stated that the taxpayer can also apply a method other than the five acceptable OECD methods, if this is deemed more appropriate.

There is no strict hierarchy of methods in the Netherlands. However, if comparable market prices are available, the CUP method may be the most direct and most reliable way of determining the transfer price and may therefore be preferable to the other methods. The CUP method is often applied to determine interest rates or commodity prices. Since a CUP is often unavailable due to a lack of sufficiently comparable data, in practice the TNMM is the most frequently used transfer pricing method.

The DTA recognises that in some cases, an exact transfer price cannot be determined and that transfer pricing is not an exact science. It is common in practice to apply the median of a benchmark of identified comparables for the pricing of transactions. One would only use the lower quartile or upper quartile of the range if economic arguments supported this position.

In establishing the range, a distinction must be made between accurate and less accurate comparables. When the comparables possess a high degree of comparability, then the range is composed of all these quantities. When less accurate comparables are used because of a lack of more appropriate ones, it may be necessary to increase the reliability of the comparables with the aid of statistical methods. An example is the “interquartile range” approach.

Once the range has been established, it is necessary to assess whether the fee for the transaction under review falls within the established range. If the fee falls within the range, no adjustment should be made. In the event that the fee falls outside the range and the taxpayer is unable to explain the deviation with sufficient documentation, an adjustment may be necessary.

The Netherlands requires comparability adjustments if necessary. The Netherlands follows the OECD TP Guidelines and applies the OECD approved methods. In paragraphs 3.47 and following, the comparability adjustments are discussed. Paragraph 3.50 elaborates that comparability adjustments should only be considered if they are expected to increase the reliability of the results of a benchmark study.

According to the state secretary, based on the resale price method, the cost-plus method or the TNMM method, the value of intangible assets can be calculated by determination of the arm’s length remuneration for the least complex entities. The residual profit should then be divided between the entrepreneurial functions, among which are included the IP.

Depending on the facts and circumstances, the various development, enhancement, maintenance, protection and exploitation (DEMPE) functions will have to be weighted in relation to their relative importance. In general, the development and enhancement functions will be given greater weight in assessing the relative contributions to the value of the intangible asset concerned.

The TP Decree (Stcrt No 2022-16685) also covers the purchase of shares in an unrelated company followed by a business restructuring and the determination of a fee for the use of intangible assets. If the value of the transferred intangible assets is determined, the value of the intangible assets for both the seller and buyer should be taken into account, thus applying the two-sided approach.

If it appears that there are large deviations between the actuals after an IP transaction and the five-year forecasts that formed the basis for the price determination at the time of the transaction, and these deviations (by more than 20%) cannot be explained by new facts and circumstances, the DTA may, according to the TP Decree, retrospectively reassess the transfer price that was determined at the time of the transaction.

For cost-sharing or cost contribution arrangements (CCAs), the arm’s length principle as elaborated in the OECD Guidelines and, in particular, Chapter VIII of the OECD Guidelines should be followed. Under the arm’s length principle, remuneration should be related to the functions performed (taking into account the risks incurred and assets used). This means that the level of remuneration of the participants in a CCA may not differ (substantially) from the remuneration that the companies concerned would receive if they were co-operating outside a CCA context. This means, for example, that a participant in a CCA that assumes risks must also exercise control over these risks and have the financial capacity to bear the negative impact of these risks.

A participant in a CCA, which only provides financing for the CCA and only exercises control over risks related to that financing and not the risks related to other activities within the CCA, is generally only entitled to an arm’s length fee for the financing, taking into account the financing risk.

The taxpayer can supplement or amend a corporate income tax return as long as no final assessment has been imposed. If the taxpayer has already received a final assessment, the taxpayer can only pursue adjustments by filing an objection within six weeks or requesting an ex officio reduction within five years after fiscal year-end if the assessment is already final (ambtshalve vermindering). If the requested adjustment is based on a foreign transfer pricing adjustment, a request for a corresponding adjustment or a MAP can be filed.

In general, the tax inspector has three years to impose a final tax assessment after the end of the fiscal year. If the extension ruling for consultants is used, which allows an extension for filing the corporate income tax return until the following fiscal year, the inspector will have an additional year to impose the final tax assessment. The tax inspector can impose an additional tax assessment until five years after the end of the fiscal year if the taxpayer acts in bad faith or “new facts” appear.

Ruling Exchanges

APAs, advance tax rulings (ATRs) and innovation box rulings are exchanged with the tax authorities in the jurisdictions in which the involved parties are tax resident.


Cross-border structures that fulfil certain hallmarks must be reported and subsequently exchanged with other EU countries. The TP hallmarks in DAC6 are the hallmarks under E, which are:

•       E.1 – cross-border arrangements that rely on a unilateral safe-harbour rule;

•       E.2 – arrangements that involve hard-to-value intangibles; and

•       E.3 – intragroup cross-border transfers of assets, functions and risks where the projected annual EBIT – during the three years after the transfer – amounts to less than 50% without the transaction.

Bilateral Approach

The Netherlands has been actively concluding Tax Information Exchange Agreements (TIEAs). On a bilateral level, the Netherlands is concluding TIEAs specifically aimed at the exchange of information and is including provisions in accordance with Article 26 of the OECD Model Convention. Since 2009, around 28 TIEAs have been concluded.

Domestic Law

Based on the International Assistance (Levying of Taxes) Act (Wet op de internationale bijstandsverlening bij de heffing van belastingen, or WIBB), information is provided to foreign competent authorities upon request if there is a financial services company that does not have sufficient substance in the Netherlands. No exchange of information will be applicable if the financial services company fulfils the substance requirements. Spontaneous exchange of information is also possible if that exchange may lead to specific tax consequences in foreign countries (eg, a withholding tax reduction that would otherwise not have been granted).

The Netherlands has a programme that allows APAs. The rules and procedures for obtaining an APA are set out in the Decree of 28 June 2019, Stcrt No 2019/13003 for rulings with an international character and its latest amendment – Decree of 19 December 2023, Stcrt No 2023, 25745. Bilateral and multilateral APA programmes are also implemented in the Netherlands through the above-mentioned decrees.

The DTA aims to issue a decision on an APA request between six and eight weeks after it has been provided with all the relevant information. Obviously, the time span from start to finish depends on the complexity of the case.

The DTA and, especially, the International Tax Certainty Team administer the APA programme, which concerns agreements on the pricing of intercompany transactions for future years. If a taxpayer wishes to obtain an APA, a request has to be filed with the local competent tax inspector and the International Tax Certainty Team. The International Tax Certainty Team carries out the procedure in consultation with the local competent tax inspector. Before requesting the APA, there is the possibility of a pre-filing meeting with the DTA. During this pre-filing meeting, the necessary information and the elements that are important in the specific case for the assessment of the APA request are discussed.

Regarding settlement agreements and current and prior-year TP issues, the co-ordination of transfer pricing within the DTA is in the hands of the Transfer Pricing Co-ordination Group. Tax inspectors within the DTA have to seek (binding) advice from a member of the Transfer Pricing Co-ordination Group when dealing with transfer pricing matters. This creates a unity of policy and application of the transfer pricing rules.

In practice there is co-ordination between the APA process and MAPs, however MAPs are the competency of the Ministry of Finance and the DTA while APAs are co-ordinated through the DTA. Furthermore, in the new decree concerning the MAP, it is stipulated that the information to be included in a request for a bilateral APA or a multilateral APA is the same as the information to be provided in a request for a unilateral APA. If a request for a bilateral APA is filed, it is necessary to also file a request for a unilateral APA at the same time.

According to the Decree of 28 June 2019, Stcrt No 2019/13003, three requirements have to be met in order to obtain an APA:

  • sufficient economic nexus in the Netherlands relating to the transactions involved;
  • no transactions that involve designated low-tax jurisdictions or jurisdictions that are on the EU blacklist; and
  • the saving of Dutch or foreign tax is not the sole or decisive motive for performing the (legal) act(s) or transaction(s).

An APA request must contain relevant information and substantiate the TP methods applied. According to the amendment of the decree in 2023, the following information has to be included in an APA request:

  • the master file, as referred to in Section 29g of the DCITA for qualifying MNEs; 
  • relevant financial information, information about the products and a functional analysis;
  • a description of the proposed transfer pricing methodology, including comparability analysis;
  • assumptions supporting the APA request;
  • a description of the contractual terms, business strategy and market conditions;
  • the financial years for which the security is requested;
  • confirmation that none of the directors of the company is on the EU blacklist; and
  • a draft standard form for the exchange of cross-border information exchanges.

If a taxpayer does not provide the required information, an APA request can be denied.

In the Netherlands, there is no formal deadline for submitting an APA request. However, it is not possible to include fiscal years for which a tax return has already been filed under an APA.

No filing fees have to be paid for requesting and/or obtaining an APA.

The taxpayer shall, first of all, indicate the period for which the APA is requested. In principle, the ruling will be valid for a maximum of five fiscal years. If the facts and circumstances justify an exception – for example, in the case of long-term contracts – a maximum term of ten financial years may be applied, with at least an interim review after five years.

An APA can have limited retroactive effect upon request, provided that the facts and circumstances have not changed since the period for which the taxpayer is requesting an APA and that the retroactive effect does not result in a lower taxable profit which is ultimately not taxed anywhere. For multilateral or bilateral APAs a roll-back is possible if all the countries involved agree that it is the correct application of the arm’s length principle and if they process this application accordingly. Again, it may not lead to profit that remains untaxed.

In practice, the DTA does not usually impose penalties in transfer pricing cases. Under the law it may, however, decide to impose penalties for not having the required TP documentation available when due, or for non-compliance with CbCR obligations.

TP Documentation

For intentionally not having the documentation ready when required, imprisonment for up to six months or a fine of up to EUR20,250 can be imposed. The fine can be higher when not having the documentation leads to under-levied tax for a higher amount. It is, however, unlikely that the tax authorities will impose imprisonment.

For non-standardised TP documentation for small and medium-sized enterprises (consolidated annual revenue below EUR50 million), the obligations are less strict. The DTA’s policy is to grant the taxpayer a reasonable period of time to hand in appropriate TP documentation. The reasonable period of time is generally four to six weeks. Master file/local file documentation, on the other hand, is in principle due upon request, if the applicable corporate income tax return filing deadlines have passed.

Country-by-Country Reporting

Based on Article 29h(1) of the DCITA, the taxpayer may receive an administrative fine for deliberate or grossly negligent failure to comply with the obligation to submit a country-by-country (CbC) report or to file a notification that another group entity will file the report. The administrative fine will not exceed the amount of the sixth category (Wetboek van Strafrecht) as referred to in Article 23(4) of the Dutch Penal Code (ie, EUR870,000).

The administrative fine is imposed by means of a fine decision. Pursuant to the General Administrative Law Act (Algemene wet bestuursrecht), objections against such a decision can be submitted to the DTA. Following the objection, a new decision is taken. An appeal against this decision can be filed with the administrative court.

Specific transfer pricing documentation may be required depending on the annual consolidated revenue of the MNE. The Netherlands requires a master file, as well as a local file for MNEs with a consolidated annual revenue of EUR50 million or more, and a CbC report and notifications for MNEs with a consolidated annual revenue of EUR750 million or more. Both have been introduced starting in FY 2016. The Netherlands has implemented the master file/local file and CbCR requirements in accordance with the OECD/G20 BEPS Action Plan 13.

In January 2022, the OECD Transfer Pricing Guidelines were updated. This update includes the addition of Chapter X to the Guidelines on transfer pricing aspects of financial transactions. In addition, a section on hard-to-value intangibles has been added.

In June 2022, the Dutch Decree Stcrt No 2022/16685 was updated as follows:

  • The section on government policy has been expanded, with a discussion on government aid measures (COVID-19 pandemic).
  • Several new sections on financial transaction have been adjusted. There is more focus on substance and the application of the comparable uncontrolled price method. The paragraphs regarding guarantees and captives have also been rewritten.
  • There is now a section regarding cash pools.
  • There is now a section regarding financial service entities.
  • Adjustments have been made to the policy on intra-group services.
  • Some textual changes in line with OECD TP Guidelines have been made.

The adjustments are a consequence of international developments, such as the new OECD TP Guidelines and OECD publications on the treatment of government subsidies. Since the OECD Guidelines provide an internationally accepted interpretation of the arm’s length principle, the secretary of finance considers the OECD Guidelines to be an appropriate explanation and clarification of the principle described in Article 8b of the DCITA.

Case Law

The Netherlands does have some specific case law regarding financial transactions, which involves a landmark case from 1988 (27 January 1988, No 23 919). The main conclusions were that intercompany loans can only be recharacterised as equity if they possess specific features, either being a loss-financing loan, a profit-participating loan or sham loan. Those definitions have been precisely defined in case law. There seem to be relevant differences between this case law and the new Chapter 10 of the OECD TP Guidelines. The new transfer pricing decree recognises this difference and it notes that if a taxpayer requests advance certainty on the application of the arm’s length principle, the OECD TP Guidelines will be taken as the starting point.

New Decree

Lastly, a new decree has removed the approved policy to charge only the relevant actual costs in the case of low-value added services. This is replaced by a brief reference to the OECD TP Guidelines, in which the option to re-charge on a cost basis can still be applied. This probably implies that the DTA will have a less flexible stance on remunerating low-value added services on a cost basis.

The arm’s length principle is the leading principle for transfer pricing purposes. The principle is also codified in Dutch tax law. There are no circumstances in which another principle would be applicable. In parliamentary history it is stipulated that, in the Netherlands, taxable profit is determined on the basis of the arm’s length principle in accordance with the interpretation agreed within the OECD.

The Dutch interpretation of the arm’s length principle has not changed significantly following the BEPS project, as indicated in the TP Decree. The documentation standards have, however, become more extensive. The TP team of the DTA has grown over time and there has therefore been an increase of TP audits or questionnaires.

The Netherlands has consistently supported the Pillar One and Pillar Two proposals and continues to support their swift implementation. It is expected that the Pillar One and Pillar Two rules will result in an increased administrative burden for taxpayers that fall under the scope of Pillar One and Pillar Two. Besides, the interaction between the Pillar One and Pillar Two systems and double tax treaties is unclear, which could lead to uncertainty for taxpayers. The complexity and the different possible interpretations of the Pillar One and Pillar Two rules could lead to discussions with the DTA. This remains uncertain, however, since final international agreement has not been reached and it therefore needs close monitoring.

It is allowed for group companies to provide guarantees (eg, for bank loans). The pricing of the guarantees should be in line with the arm’s length principle and thus also with the accurate delineation of the transaction.

Dutch TP legislation and decrees do not officially refer to the UN Practical Manual on Transfer Pricing. The UN Manual is, however, also based on the arm’s length principle and has the goal of making transfer pricing more understandable in practice. The DTA will therefore generally be open to explanations that are based on the UN Manual.

Low-value-adding services are a safe harbour. A mark-up of 5% may be applied for specific services without the generally required comparability study. The low-value-adding services doctrine of the OECD is referred to in the Dutch TP Decree. It thus applies to intercompany services that:

  • are of a supportive nature;
  • are not part of the core business of the MNE group (ie, not creating the profit-earning activities or contributing to the economically significant activities of the MNE group);
  • do not require the use of unique and valuable intangibles and do not lead to the creation of unique and valuable intangibles; and
  • do not involve the assumption or control of substantial or significant risk by the service provider and do not give rise to the creation of significant risk for the service provider.

There is also a safe harbour for back-to-back financial transactions that are conducted by limited risk intra-group service providers. The equity at risk relating to these transactions should be at least 1% of the loan volume or EUR2 million. This serves as a de facto safe harbour, although benchmark studies are required to determine the pricing. This specific policy is currently being investigated by the government. The proposed European Anti-Tax Avoidance Directive III (“ATAD 3”), which targets misuse of shell companies, may speed up this process. 

The OECD Transfer Pricing Guidelines considers location savings as a comparability factor. The Netherlands follows the OECD Transfer Pricing Guidelines for the application of the arm’s length principle and also the guidance concerning location savings. There are no specific domestic rules.

Since the Netherlands follows the OECD Transfer Pricing Guidelines, no other unique rules are applicable in the transfer pricing context. Although one should take into account the recently introduced transfer pricing mismatch legislation that is covered in 1.2 Current Regime and Recent Changes.

While there is not operational co-ordination between the Dutch customs authorities and the DTA, since these are separate organisations, they co-operate closely if required on a case-by-case basis.

Controversy Process

In the event of a tax controversy, the DTA initially attempts to enter into discussions. A taxpayer will be given the opportunity to explain how the transfer pricing works and to provide additional relevant information.

Court proceedings only occur if no common ground can be found during these discussions and if the case is considered sufficiently important for the DTA from both a technical and a financial perspective.

In principle, a transfer pricing dispute does not differ from any other dispute between tax authorities and taxpayers. Eventually, the inspector will or will not make a correction and this can be challenged in an objection to the DTA and in subsequent appeal proceedings.

After the taxpayer has objected to the DTA, the taxpayer can make an appeal before the district court. After the district court has issued a judgment, an appeal can be initiated with the Court of Appeal and then with the Dutch Supreme Court.

Since transfer pricing discussions are often complex and extensive, such procedures tend to take a long time. It is also important to note that the judges involved are generally not transfer pricing specialists and it is difficult to predict the outcome of proceedings. Since transfer pricing is not an exact science, the burden of proof is relatively important.

MAPs and Arbitration

On the basis of a tax treaty, a MAP is (usually) possible between tax authorities with the aim of eliminating double taxation (Stcrt No 2020/32689). Although a MAP between countries based on a bilateral tax treaty will often lead to a result whereby no double taxation remains, this is certainly not guaranteed. This can therefore lead to double taxation taking place. Currently, there is a trend towards including a mandatory arbitration clause in tax treaties to ensure that double taxation is avoided in all cases (eg, the EU Arbitration Convention and the arbitration provisions in the Multilateral Instrument).

There is not much litigation in the area of transfer pricing since most disputes are settled without going to court. The DTA usually only institutes legal proceedings in cases where the parties cannot agree from a theoretical perspective and where the financial impact is significant.

Supreme Court 8 May 1957, No 12 931, BNB 1957/208

For the purpose of determining the parent company’s profit, transactions with subsidiaries must be reported as if they had taken place with a third party. The taxpayer argued that profit should only be reported as soon as a transaction with third parties had taken place, but the Supreme Court rejected this reasoning. Internal transactions thus cannot be delayed until external transactions have taken place, but should be accounted for in accordance with the arm’s length principle.

Court of Appeal’s Gravenhage 13 June 1984, No 87/84, BNB 1986/13

The Court of Appeal considered a 10% mark-up on services purchased from an Irish group company reasonable. It had been considered customary to determine the compensation for the services rendered in relation to the costs incurred. What the taxpayer paid over and above this 10% was part of the taxpayer’s profit.

Supreme Court 28 June 2002, No 36 446, BNB 2002/343

The Supreme Court ruled that the burden of proof that the taxpayer had not been dealing at arm’s length rested with the tax inspector and that the tax inspector did not meet this burden of proof. The Supreme Court also referred to the OECD Guidelines for the application of the arm’s length principle and transfer pricing methods. The case was about a car importer of an international car brand that incurred a loss relating to import and sales of its most-sold car. However, over the total of goods imported and sold, the car importer remained profitable. The potential existence of offsetting transactions was acknowledged. The tax inspector unsuccessfully claimed that the purchase price of the most-sold car was too high.

Court of Appeal Amsterdam 20 August 2003, No 01/04083, V-N 2004/30.16

This case concerned a flow-through company with nearly risk-free intra-group borrowing and lending activity. According to the court, a cost-plus surcharge of 10% was appropriate in this case. The Ministry of Finance did not file an appeal in cassation but published that according to APA practice, the compensation should be related to the loan amount. For loan amounts below EUR100 million, this can be partly determined on a cost-plus basis.

Court Arnhem 7 March 2007, No AWB 06/288, V-N 2007/35.6

The court ruled on transfer prices between the taxpayer and its Chinese affiliate. The tax inspector succeeded in proving that the transfer prices were not arm’s length in so far as the compensation for the limited procurement activities of the Chinese affiliate exceeded a cost-plus mark-up of 10%.

Supreme Court 25 November 2011, No 08/05323

The Supreme Court ruled that if the interest rate on a loan between related parties was not determined in accordance with the arm’s length principle, an interest rate that complies with this principle must be used to calculate the taxable profit. If it is not possible to find an interest rate for which a third party would be willing to provide the loan under the same conditions and the loan thus de facto becomes a profit-sharing loan, the loan will be labelled non-businesslike (onzakelijk). Such a loan cannot be depreciated for tax purposes.

Court of Appeal’s-Gravenhage 13 March 2020, No 17/00714, V-N 2020/25.9

The taxpayer operates an entrepreneurial zinc smelter, being part of an international group. In 2010, it was decided to transfer the group’s headquarter to Switzerland, accompanied by a gradual transfer of functions amongst which was central procurement. At some point the taxpayer qualified its Dutch activities as toll manufacturing while the tax authorities took the position that more high-value-adding functions were still involved. The Court of Appeal ruled that the profit-split method should be considered an appropriate method to determine the compensation for the business restructuring and therefore agreed with additional assessments imposed by the tax authorities. After the decision of the Court of Appeal, partly in favour of the tax payer, the parties settled on the arm’s length amount for the compensation.

There are no restrictions on outbound payments related to uncontrolled transactions.

There are no restrictions on outbound payments related to controlled transactions. However, as per 2021, Dutch tax law includes a new conditional withholding tax of 25.8% on intra-group interest and royalty payments to entities in selected low-tax jurisdictions.

There are no specific domestic rules regarding the effects of other countries’ legal restrictions.

A summary will be published for each APA with an international character. This summary will include a brief explanation of the facts and circumstances and – as far as is relevant – of the main conclusions from transfer pricing reports or other documents, an analysis of the requested tax ruling based on the relevant laws and regulations, and the conclusion on the basis of which the APA was granted.

A summary will also be published when the ruling request did not result in a ruling. The summary will then include an explanation of why the ruling was not concluded.

The summary will be anonymised in such a way that it cannot be traced back to an individual taxpayer.

The outcome of TP audits is confidential and will not be published.

In principle, the DTA does not use secret comparables to substantiate pricing adjustments. They may, however, use secret comparables in their TP risk assessment if doing so is considered appropriate and necessary.

Taxand Netherlands

Jachthavenweg 124
1081 KJ Amsterdam

+31 612 744 243
Author Business Card

Law and Practice in Netherlands


Taxand Netherlands is an Amsterdam-based independent advisory firm offering a full range of tax advisory and compliance services (including VAT, wage tax, M&A, international and European tax law, corporate income tax, real estate and transfer pricing). Its focus is on tax disputes and transactions, nationally and internationally. The firm consists of over 25 seasoned tax professionals and is part of Taxand Global, a network with tax law firms in nearly 50 countries. This allows it to offer high-quality and integrated tax advice worldwide. The transfer pricing team at Taxand Netherlands helps clients to prepare and maintain appropriate transfer pricing documentation, including benchmark studies. The team also assists clients with business restructurings, (bilateral) advance pricing agreements with the tax authorities, and transfer pricing audits or disputes.