On 11 May 2018, a new Dutch transfer pricing decree was published as a follow-up to developments such as the OECD BEPS project and the 2017 OECD transfer pricing guidelines.
A brief glance at the new decree
Where the initial decrees of 2001 and 2004 were published to provide additional guidance, the 2013 decree mainly added anti-abuse measures to the 2004 decree. In addition to the anti-abuse measures that were introduced in the 2013 decree, the 2018 decree also provides guidance following the BEPS initiative.
The decree now explicitly addresses the option of the tax authorities to impose penalties when this is considered appropriate based on the relevant facts and circumstances. Although any deviation from the guidance in the decree will not automatically result in penalties, the explicit emphasis on penalties does indicate that penalties are likely to be imposed more often than in the past. This is in line with the aggressive position taken up by the tax authorities to combat abusive behaviour.
The decree also reiterates the position that any clarification on the application of the arm’s length principle will also apply to previous years. Although such a dynamic approach to the application of the arm’s length principle might be disputed, companies should be aware that their operations will be evaluated using the most recent insights that may substantially differ from the insights at the time of the past transactions.
Main changes / intangible assets
Given their relevance for multinationals, we have highlighted some changes, such as:
- Transactions in relation to (in)tangible fixed assets
- Hard-to-value intangible assets
- The purchase of shares in an unrelated company followed by a business restructuring
- The determination of the remuneration for the use of intangible assets
To read the complete alert, please click New Dutch transfer pricing decree.