Basic principles of transfer pricing in The Netherlands

Nowadays the Netherlands have extensive policy with regard to the topic of transfer pricing.  There is also legislation (see below), but this only covers the basic principles.  In essence, the OECD Guidelines for transfer pricing form the basis for the Dutch transfer pricing policies and legislation.  

The basic Dutch principles of transfer pricing can be summarised as follows:

1. The profit of a Dutch company must be determined as if the Dutch company where a fully independent party, thus ignoring shareholder’s influences (at arm’s length principle).  This rule applies to Dutch corporations, but also to Dutch branches of foreign corporations.
2. If the accounting profits of a Dutch company are considered to high or too low, the profit for accounting purposes will have to be adjusted to determine the profit for tax purposes. 
3. Profit adjustments may go upward, which then in most cases technically constitute a deemed dividend, or they can go downward, which in most cases technically constitute a deemed capital contribution. 
4. Although the primary impact of a profit adjustment is the corporate tax charge, there are secondary exposures in the area of Dutch dividend withholding tax (deemed dividends - see above). 
5. The profit adjustments can be applied by the tax payer voluntarily and reported to the tax authorities in tax returns.  The tax authorities may however also force profits adjustments upon the tax payer by levying assessments which deviate from tax returns filed.
6. It is generally possible to obtain certainty in advance from the Dutch tax authorities on transfer pricing issues through advance tax rulings. 

What we can for you:

We have extensive experience with transfer pricing issues and we are gladly prepared to assist you in this field as well.