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©2015 RSM NL. All Rights Reserved. ©2015 RSM NL. All Rights Reserved.
Dutch transfer pricing documentation requirements – An overview
March 2016
©2015 RSM NL. All Rights Reserved.
Contents
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Dutch transfer pricing legislation
New Dutch transfer pricing documentation rules
How can RSM help?
About RSM
©2015 RSM NL. All Rights Reserved.
Dutch transfer pricing legislation
Transfer pricing documentation requirements:
• According to Article 8(b) of the Dutch Corporate Income Tax Act (“CITA”), 1969, Dutch taxpayers are required to make available the following:
• Certain information regarding inter-company
transactions • The relationship between affiliated companies involved
in the transaction • How inter-company prices are calculated
• Based on the above transfer pricing documentation, the Dutch tax authorities should be able to determine whether the relevant inter-company transactions are carried out on arm’s length terms
• The Dutch transfer pricing legislation does not give a clear indication as to exactly what the minimum requirements are in terms of transfer pricing documentation. However, in the explanatory memorandum on the legislation, reference is made to the OECD Guidelines in this respect
• The Dutch transfer pricing decree of 14 November 2013, no. IFZ 2013/184M, also provides some guidance on the documentation that should be maintained and the option for taxpayer to apply the “EU transfer pricing documentation” in accordance with the EU Code of Conduct on transfer pricing documentation
• However, on a best practices perspective, it is understood that the documentation should include the following:
• A summary of relevant intra-group transactions • A functional analysis • An industry analysis • A summary of the transfer pricing methods and
margins used including evidence that the methods have resulted in an arm’s length outcome
• Details on companies strategies including critical assumptions
• Intra-group arrangements including critical assumptions
New transfer pricing documentation rules:
• BEPS Action Plan 13 on “Transfer Pricing Documentation and Country-by-Country Reporting” requires Multinational Enterprises (“MNEs”) that meet certain consolidated turnover thresholds to prepare the following three documents (i.e. the so called 3 tiered approach):
• A master file
• A local file
• A country-by-country report (“CbCR”)
• The 3 tiered (“BEPS”) approach has been endorsed by the Netherlands and was introduced in the Dutch CITA in Articles 29b through 29h as per January 1,2016
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BEPS Action 13 in the Netherlands: New Dutch transfer pricing documentation Rules
Transfer pricing documentation requirements – Master File and Local File:
• EUR 50 million threshold
• Master File should contain the following information:
• Information regarding MNE Group’s global business
• The nature of its activities and its general transfer pricing policy
• Its worldwide allocation of income and economic activities
• Local File should contain the following information:
• Information that is relevant for an analysis of the transfer pricing terms and conditions
applicable on transactions between the tax payers and Group entities in other states
Country-by-Country Report:
• EUR 750 million threshold
• The CbCR contains
• An overview per country i.e. aggregate information relating to the amount of revenues, profit
(or loss) before income tax, income tax paid, number of employees etc.
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BEPS Action 13 in the Netherlands: Important terms of the Master File
• EUR 50 million threshold
• Master File should contain information (blue-print) regarding the following:
• The MNE Group’s global business
• The nature of its activities and its general transfer pricing policy
• Its worldwide allocation of income and economic activities to support tax administrations to
assess whether substantial transfer pricing risks exist
• Should be available in the taxpayer’s administration when tax return is filed for the relevant year
• May be prepared in either Dutch or English
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©2015 RSM NL. All Rights Reserved.
BEPS Action 13 in the Netherlands: Important terms of the Local File
• EUR 50 million threshold
• Should contain information related to:
• Description of management structure, reporting lines, description of key local individuals
• Description of local business, business strategy and competitors
• Analysis of controlled transactions, including comparability and functional analyses, selection
of transfer pricing methods and tested parties, amount of intra-group payments and receipts
of each category of transaction, and economic analyses; and
• Information and allocation schedules showing how the data used in applying the transfer
pricing methodology ties to annual financial statements
• Should be available in the taxpayer’s administration when tax return is filed for the relevant year
• Needs to contain all the companies that operate in the country
• May be prepared in either Dutch or English
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©2015 RSM NL. All Rights Reserved.
BEPS Action 13 in the Netherlands: Important terms of the CbCR
• EUR 750 million with an ultimate parent entity of Dutch tax residency
• CbCR contains a breakdown of revenues between related parties and unrelated parties, profit
before tax, income tax (paid and accrued), capital , number of employees, tangible assets
(excluding cash)
• The CbCR requirement applies to Dutch headquartered Groups, but could also apply to Groups
which are headquartered in another jurisdiction in the following specific circumstances:
• The country where the ultimate parent company is a resident has not introduced similar
legislation with regards to CbCR; or
• There is no agreement for the exchange of information between this country and the
Netherlands; or
• There is a systematic negligence in the exchange of CbCR between this country and the
Netherlands
• Submission within 12 months after relevant year end
• The CbCR may be prepared either in Dutch or English
• Non-compliance may lead to a potential penalty varying from EUR 8.100 (unintentional act) to
EUR 20.250 (serious misconduct) in addition to a possible imprisonment in the event of serious
misconduct
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Action 13 in the Netherlands: Summary
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Master file Local File CbCR
• Organizational structure
• Description of company
activities
• Intangibles
• Financial activities within
the Group
• Financial and tax position of
the MNE Group
• List of important
agreements, intangibles
and transactions
• Financial information
regarding specific
transactions
• Comparability analysis
• Selection and application of
the most suitable transfer
pricing method
• Economic analysis
(benchmark)
• Revenues (related / third
parties)
• Profits before tax
• Cash tax paid
• Income tax accrued
• Stated capital
• Accumulated earnings
• Number of personnel
• Tangible assets other than
cash and cash equivalents
• Description of every Group
entity
Consolidated revenue
> EUR 50,000,000
Consolidated revenue
> EUR 50,000,000
Consolidated revenue
> EUR 750,000,000
©2015 RSM NL. All Rights Reserved.
How RSM can help?
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Preparation of master file for the MNE Group
Preparation of local file template for one Group entity (for
instance, Netherlands) to be used as a template for other
countries where MNE Group operates
Tailoring the local file template prepared for the above Group
entity into local country files for remaining countries where
MNE Group operates
Being sparring partner for providing assistance in the
preparation of CbCR for the MNE Group
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Your trusted RSM advisors
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Mario Van Den Broek Partner, Transfer Pricing Leader
Amsterdam & New York T: + 1 914 708 8609 E: mvdbroek@rsmnl.nl mvdbroek@rsmnl.nl
Rishi Sapra Transfer Pricing Manager
Amsterdam T: + 31 (0) 6 4757 0983 E: rsapra@rsmnl.nl
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RSM International
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