Rulings

About rulings

A tax ruling is an agreement with a tax authority on how to interpret tax legislation for the relevant facts and circumstances of a specific taxpayer. The tax ruling provides certainty to the tax payer (and tax authority) that no correction will be made on the topic for which the ruling is obtained.

Common tax rulings that relate to Transfer Pricing agreements are:

• Advance Pricing Agreements (APAs);
  • Agreement on the transfer pricing policy for a taxpayer, usually for the upcoming 3 or 5 years.
  • APAs can also be obtained with two tax authorities (Bilateral APA or BAPA) or multiple tax authorities (Multilateral APA or MAPA).
• Innovation Box Rulings;
  • Ruling that relates to an agreement on how much profit of the taxpayer can be attributed to innovation and is taxed at a lower tax rate.
• Mutual Agreement Procedures (MAP) could be considered in the same category.
  • If a transfer pricing correction is made you usually have the possibility to request a MAP. The goal of the MAP is that the tax authorities of the taxpayers to which the correction relates will discuss with each other to determine the arm’s length price of the transaction that has been corrected.

The benefits of a tax ruling

• Certainty
• Can be supportive towards foreign tax authorities as a ‘quality stamp’ that another well-respected tax authority has for example approved your Transfer Pricing policy. This will reduce the chance that they start an audit or make a correction.
• Provides more comfort internally, to investors and auditors.
• For the innovation box ruling, this will make it (more) possible to apply the innovation box which reduces your tax costs and increases a (potential) valuation.
• Reduces the risk of double taxation and corrections

We are working on tax rulings that relate to Transfer Pricing on a weekly basis and were for example selected by the European Union to support two European tax authorities in improving their APA processes. In addition, our former heads of the Dutch APA team know the ins and outs of these matters, have shared this knowledge internally and can support you as well.

If you would like to discuss how we can be of service to you, please make an appointment for a free consultation by phone or fill in our contact form. We are looking forward to meeting you.

Our ruling services

Mutual agreement procedures (MAPs)

Mutual agreement procedures (MAPs) can be used by taxpayers if they end up in a situation of double taxation due to a transfer pricing correction made by a tax authority. Simply put, the taxpayer requests the competent authorities of the jurisdictions involved to discuss with each other what the arm’s length pricing should have been in order to eliminate double taxation. The MAP is regulated in the OECD Model Tax Convention, tax treaties and the EU Arbitration Convention.

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Advance Pricing Agreements (APAs)

Advance Pricing Agreements (APAs) are legally binding agreements between the taxpayer(s) and the tax authorities that are used to obtain prior clarity on the application of transfer pricing methods and/or transfer pricing rules for a particular set of transactions. This Transfer Pricing agreement could include an agreement on the appropriate transfer pricing methodology for a particular (set of) transaction(s). An APA is a specific form of a tax ruling. APAs must be aligned with the law and the transfer pricing regulations of the applicable countries.

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Bilateral and Multilateral APAs (BAPAs and MAPAs)

Advance Pricing Agreements (APAs) are legally binding agreements between the taxpayer(s) and the tax authorities used to obtain prior certainty on the application of transfer pricing methods and/or transfer pricing rules for a certain (set of) transaction(s). This Transfer Pricing agreement could include an agreement on the most appropriate transfer pricing method to be applied. APAs must be aligned with the law and the transfer pricing regulations of the countries involved.

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Innovationbox

The Dutch innovationbox regime is a preferential tax regime to stimulate R&D activities in the Netherlands. The main benefit of the Dutch innovationbox is that profits generated with innovative activities are subject to a reduced effective corporate income tax rate in the Netherlands.

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