Dutch |
PrintIn the Dutch Corporate Income Tax Act, a special provision is included for financial service companies. Also, there is special policy relating to the possibility of obtaining an advance tax ruling for financial services activities within a group of companies.
Financial services exist in a vast variety of forms. Here too, an arm's length price should be calculated on a case-by-case basis, based on the functions performed and on a comparison with transactions between third parties.
If the functions of a financial service company consist primarily in supplying loans, the functions performed by the company in question are basically comparable with the functions performed by independent financial institutions operating under the supervision of the Netherlands' Central Bank. The application of the arm's length principle implies that the arm's length price for the functions performed should be based on the fees charged by these institutions for comparable services.
The ruling policy provides for specific substance requirements and the requirement that the Dutch finance company bears sufficient economic risks, which includes amongst others the requirement to keep a certain minimum amount of equity at a risk (1% of outstanding loans or € 2 million if this is less).
The risks incurred should be taken into account in determining the arm's length fee which an affiliated lender should charge. The ruling request should contain a calculation of this remuneration.
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