New Decree on Transfer Pricing
On 26 November 2013, the Dutch State Secretary of Finance published a new Decree (IFZ 2013/184M) on transfer pricing, the arm’s length principle and the latest update of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2010). The new Decree will replace two former Decrees dated 30 March 2001 (IFZ2001/295M) and 21 august 2004 (IFZ2004/680M). With the new Decree, the State Secretary of Finance wishes to clarify the policy of the Dutch tax administration on transfer pricing.
Summary
The new Decree provides:
- A more detailed description of the applicability of the arm’s length principle;
- Amendments following changes in Dutch legislation and case law;
- Amendments following an update of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (2010) (“OECD TP Guidelines“);
- A more limited explanation of the use of Transfer Pricing (“TP”) methods;
- A clarification regarding shareholders activities, which is in line with the “Guidelines on low value adding services” as published by the EU Joint Transfer Pricing Forum (“EJTPF”);
- A clarification indicating that corporate governance costs may also be mixed costs (part shareholder costs and part group costs);
- A replacement of the text regarding financial/treasuring activities (in line with Dutch case law).
Furthermore, the new Decree pays special attention to transactions which can not be considered at arm’s length and involve:
- Intangible Property (“IP”);
- Intragroup procurementactivities;
- Intragroup (re)insurance (captive insurance) activities.
Finally, attention is paid to:
- The relation with the EJTPF;
- Guarantees in relation to loan agreements;
- Documentation requirements;
- Advance discussions with the tax authorities (pre-clearance).
Read more in the below attachment
