We assist our clients with a full range of transfer pricing services, which include a full spectrum of multidisciplinary advice and compliance services in order to keep our client compliant to applicable transfer pricing rules, documentation and reporting requirements in the Netherlands and in other countries where our client is active.
Every multinational and cross border operating SME has to deal with the international aspects of transfer pricing. In our international practice, we deal with transfer pricing issues every day.
As specialists in our field, we are sought and found by our clients who need our knowledge and expertise and would like to make use of it, either on a project by project basis or on a more long-term basis.
We keep a close eye on the developments of transfer pricing legislation and policies in the Netherlands and abroad. For transfer pricing advice or analyses of tax law in other countries, we have international (digital) libraries at our disposal, which give us fast and efficient access to detailed information on transfer pricing legislation, foreign tax systems and tax treaties. In addition, we have an international network of tax specialists in other countries with whom we regularly cooperate for cross-border assignments and who keep us informed about developments in the field of transfer pricing and international taxation in their countries.
If you would like more information about our transfer pricing services, please feel free to contact us by e-mail or call us at our office in Amsterdam +31 (0) 20 5709440 or Rotterdam +31 (0) 10 2010466.
We advise our clients on the scope and application of (Dutch) transfer pricing legislation and policies in the Netherlands, and the documentation and reporting obligations in relation thereto.
Our transfer pricing services do also extend to other countries. We can also assist with advice on transfer pricing issues in other countries through our international network of international tax and transfer pricing experts in other countries.
We support our clients with the development and design of their transfer pricing policy(ies), that adequately substantiates the company’s internal pricing and profit allocations and defines the (international) parameters for determining the internal prices for goods delivered and services rendered within the group
The design of the transfer pricing policy(ies) of our client requires full insight in the business model of our client, the value chain within the group, and the role and functions of all distinguishable parts of the group. After an analysis of available data and relevant facts and circumstances, we identify fiscally relevant information and translate this into an adequate and a fiscally acceptable transfer pricing strategy(ies).
After performing an economic analyses’ of the business of our client and the business transactions conducted within the group of our client, we can advise our clients on the most appropriate transfer pricing method(s) to be applied. This can relate to all OECD “preferred methods” (like the Comparable Uncontrolled Price Method, the Resale Minus Method, or Cost-plus method), or any of the OECD “last resort” methods, like the Transactional Net margin Method, or Profit Split Method.
Through our analysis’ we determine which method(s) is (are) are considered most suitable for the allocation of cost and profits between distinguishable parts of a company or group of companies, and a fiscally acceptable range of margins or profit levels.
We don’t tell our clients how to run their business and which business model(s) they should apply. That is our client’s expertise, which we do not interfere with. However, almost any group of companies is run and managed as a whole, and the way the profits and margins are actually allocated to and divided between distinguishable parts of the company or the group does generally not have a big priority, as “it is one and the same company anyhow”. The Dutch tax authorities explicitly take a different view, in particular if a business goes over the country’s borders, and the local tax base may be affected by non-business like internal pricing arrangements and profit allocations. The starting point for taxation of related parties is that legally or fiscally distinguishable parts of the company and the group must act towards each other as if they were non-related (at arms’ length principle). That is why the Netherlands implemented legislation which demands from (in particular) cross border operating companies that they document and provide insight in the way the internal pricing within the company is determined, and the transfer pricing methods that are applied to substantiate these pricing policies.
Through an in-depth economic analysis of our client’s business and mapping out our client value chain(s) we can assist our client to assign adequate value(s) to the various parts of the company/group that are involved with internal transactions, be it as part of the same company, or as separate legal entities.
We assist our clients with documenting their transfer pricing strategy(ies) and by the drafting and streamlining of written policy statements, protocols and (internal agreements).
We offer various solutions ranging from complete outsourcing of the transfer pricing documentation, to a review of the documentation prepared by our client in order to identify possible risks, shortcomings and inefficiency’s. Our expertise and experience adds value to our client’s transfer pricing position.
Transfer Pricing documentation is becoming increasingly important to comply with fiscal documentation requirements and to be prepared for questions and scrutiny from the tax authorities in the Netherlands or abroad. We assist our clients to develop adequate transfer pricing documentation and to keep it up-to-date.
The absence of adequate transfer pricing documentation provides tax authorities with a strong case to adjust the prices charged within the group for goods delivered or services rendered, and the internal allocation of cost and profits as such. If no adequate transfer pricing documentation is in place, it will be very difficult for the tax payer to defend itself against scrutiny from the Dutch tax office or foreign tax authorities, let alone to adopt a tax efficient and internationally overall effective transfer pricing strategy for the group.
Our up to date transfer pricing documentation will provide for a proactive defence against scrutiny from the Dutch or involved foreign tax authorities with regard to the transfer pricing position of our client.
We manage the CbC-reporting and notifications on behalf of our clients.
According to Dutch tax law, multinational companies with a turnover of €750 million or more, must submit a country report to the tax authorities in the country where the designated reporting entity is resident for tax purposes.
The reporting entity can be the ultimate parent entity, the surrogate parent entity, or another designated group entity.
The country report must contain detailed information about local operations in the various tax jurisdictions where the group is active, including
We assist our clients with the preparation of CBC reports for which we have an automated online software solution.
A Dutch company that belongs to an international group but which is not the designated reporting entity should notify the Dutch tax authorities annually, about which entity within the group will file the country report and in which country this will be done.
This notification must be received by the Dutch tax authorities by the end of each reporting year.
We make these CBC-notifications on behalf of our clients.
We assist our clients with the preparation of the Master File and Local File, for which we offer an automated online software solution. Through an online dashboard, we work together with the various (local) representatives of our client, to gather the necessary information and documents for the preparation of the Master File and Local Files, to prepare the Master File and Local File in the prescribed format, and to keep them up to date on a year to year basis.
Dutch tax law provides for the obligation for “big” multinational companies and cross border operating SME’s to document their transfer pricing policies within the group, and the actual transactions that take place within the group on a year to year basis.
In the Netherland any multinational company that has a consolidated group turnover of € 50 million or more, has the obligation to prepare a so-called Master File for the group, and a Local File for each country where the group is active. Both files need to be included in the local administration and can be requested for review by the Dutch tax authorities.
The purpose of the Master File and Local File is to document the transfer pricing within the group (“as it is”). The Master File provides for an overview of information relevant for the transfer pricing within the group as a whole, such as the transfer pricing policy(ies) of the entire group, the composition and organisation of the group, an overview of the allocation of activities, risks and assets between the various members of the group (functional analysis), details of the fiscal and financial position of the group, etc.
The Local File contains an overview and description of actual intra-company transactions to which local entities are an party on a country by country basis, and the way the internal transfer prices have been determined for such transactions.
Dutch based companies that are a member of a group that does not make the € 50 million threshold of consolidated turnover, are not required to prepare a Master File or Local File, but they will have to comply with the general documentation requirement of their transfer pricing.
We carry out general transfer pricing studies and conduct specific benchmark studies for our clients to support their transfer pricing, and to keep them compliant to applicable transfer pricing and transfer pricing documentation requirements in the Netherlands and abroad.
Through our benchmark studies we can substantiate an arm’s length range of prices, and/ or an adequate amount of operating profits.
Our benchmark studies in most cases relate to goods or services, royalties or to financial transactions, such as an interest rate.
Benchmarking is in fact no more than the determination of a comparable price (or better, range of prices) for a particular transaction or set of transactions (up to a complete enterprise or part thereof) on the basis of statistical data which must always be based on a accepted methodology that supports and substantiated the pricing in related party transactions. The OECD Transfer Pricing guidelines give guidance for determining the best transfer pricing method(s) to be applied in a given business model.
We tailor our benchmark studies to our client’s specific circumstances so that we can properly identify the comparability factors that per the OECD Guidelines need to be addressed and ultimately will provide for the best basis for the fiscal acceptability of the benchmark study performed.
Through our benchmark studies we can calculate margins according to selected transfer pricing methods, different Profit Level Indicators and working capital adjustments, if so required. Our reports will typically show the interquartile range, maximum and minimum results for the financial years selected, and a weighted average.
We offer a cloud-based software solution for our benchmark studies using proprietary software application, third-party, technology and databases.
We use reliable and proven third-party technology and company databases, including
Our benchmarking primarily relates to identifying companies that perform similar activities as our client (the tested party), and establishing a method to determine an “arm's length profit” for our client by reference to the profitability of selected companies in our data bases that perform similar activities in terms of functions performed, assets employed, and risks taken.
Our work process and software provides audit trails and reports, which keep record of the evidence of the benchmarking process, comparable data and the decision-making process in relation thereto. It is based on tested and reproducible technology which gives our benchmark studies a reliable outcome.
If our client wants 100% certainty in advance about transfer pricing related topics, we can represent our client in the negotiation with the Dutch tax office for obtaining an Advance Pricing Agreement (APA).
The Netherlands has extensive policies describing the conditions to be met for obtaining an APA and the proper procedures to follow. Special rules apply for financial services companies.
Preliminary discussions with the tax office to determine feasibility of an APA in a given case are generally possible.
An APA request can cover multiple Dutch transfer-pricing issues, or it may be limited to the transaction with specific related parties or to specific transactions.
A tax payer can only obtain an APA if it can demonstrate that the transfer prices used or the transfer prices that are intended to be used, are consistent with the arm’s length principle, which in general means that the conditions of transactions between group companies are comparable with conditions of transactions conducted by unrelated companies. Although it is not a formal requirement, in practise benchmark studies are required to support and substantiate the pricing arrangements or profits allocations to be covered by the APA. Our benchmark study reports are suitable for this purpose.
When filing the APA request it should not only include information on the tax payer and the transactions, products, business or arrangements that need to be covered by the APA, but also information about all parties involved, the worldwide organisational structure of the client and its ultimate beneficial owners, and last but not least, a description of the proposed transfer pricing methodology(ies).
Other information to be provided concerns amongst others the critical assumption(s) on which the proposed methodology or price is based, a general description of the market conditions and the accounting periods to be covered.
We support our clients with our in-depth technical knowledge and expertise about transfer pricing in discussions and negotiations with tax authorities. We can also represent our client during a (dedicated transfer pricing) tax audits, disputes with the tax authorities or procedure regarding transfer pricing issues.
In situations where the Dutch tax authorities investigate and scrutinizes the tax payer’s profit or cost allocation on the basis of transfer pricing principles, they tend to take an unitary perspective on arguments to maximize profit allocation to the Netherlands, thereby challenging the business model(s) of our clients, and not seldom, the business models of parties related to our clients, like shareholders or foreign subsidiaries or group companies.
In the Netherlands, in first instance the tax payer has the obligation to substantiate and document its transfer pricing, but it is always the tax office which bears the burden of proof if they want to adjust taxable profits on the basis of an inadequate transfer pricing method(s) applied. Transfer pricing is not an exact science, and multiple solutions may be available for any given case, whereby the preferences and business objectives of the tax payer always play an important, if not decisive role. It may never be up to the tax inspector alone to decide which transfer pricing solution is the best solution for the client.
In any tax assessment, audit or court case scenario, the tax authorities may not agree with a certain benchmarking approach, but then then they should provide evidence of the contrary, the better method to be applied. We assist our clients in these kind of negotiations with tax authorities in order to prevent or resolve transfer pricing adjustments.
We assist our clients with performing a due diligence with regard to transfer pricing topics, which can evolve for instance in the context of a merger, take over or management buy-in or buy out.
During the last decade the Dutch tax authorities (like most tax authorities around the world) have become increasingly aware of the possibility for multinational enterprises to avoid taxation by manipulating prices for internal services and delivery of goods. Under leadership and guidance of the OECD, they rapidly implemented extensive and detailed transfer pricing legislation, and introduced a wide range of transfer pricing documentation, filing and compliance obligations.
Transfer pricing is currently the key focus point of Dutch tax authorities in the context of tax audits, dedicated transfer pricing reviews and the review process of the annual corporate income tax return of multinationals and cross border active SME’s. Nowadays, it is unthinkable that the transfer pricing position of a company or group of companies is not thoroughly investigated and must be clarified in that context.
We assist our clients with our expertise about transfer pricing, and help them to translate potential transfer pricing issues in quantifiable risks, and to manage the risks in relation thereto.