On May 11, 2018 a new Decree on transfer pricing was published in the Dutch Staatscourant (the Decree from April 22, 2018, nr. 2018-6865). The Decree regards transfer prices, the application of the arm’s length principle and the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (The OECD Guidelines). The Decree published on May 11, 2018 replaces the Decree from November 14, 2013, nr. IFZ 2013/184M.

 

With regard to cross-border transactions, there is an agreement within the OECD member states on the so-called arm's length principle, as included in Article 9 of the OECD Model Convention. The OECD commentary on Article 9 of the OECD Model Convention and the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines) provides further explanation and interpretation regarding the arm's length principle.

 

In 2002 the arm’s length principle was codified in the Netherlands by including Article 8b in the Dutch corporate income tax Act.

 

Because the OECD Guidelines contain an internationally accepted explanation and interpretation of the arm's length principle, the Dutch State Secretary of Finance sees the OECD Guidelines as an appropriate explanation and clarification of the principle described in Article 8b of the Dutch corporate income tax Act.

 

The Decree issued by the Dutch State Secretary provides further explanation and interpretation of the arm's length principle. The Decree mainly focuses on aspects where the OECD guidelines leave room for a jurisdiction’s own interpretation or where uncertainty exists.

 

Click here to be forwarded to the Decree of the Dutch State Secretary for Finance regarding transfer prices, the application of the arm’s length principle and the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations as published on May 11, 2018 in the Dutch Staatscourant.

 

Next to the aforementioned Decree, on the same date in the Dutch Staatscourant a Decree of the Dutch Secretary of State of Finance by which the Secretary of State announced its decision to incorporate a Coordination Group for Transfer Prices (the CGTP) was published. This latter Decree replaces the Decree from August 11, 2014 nr. DGB2004/1339M.

 

The CGTP will be responsible for the coordination of the execution in the area of transfer prices within the tax authorities and for ensuring that there is unity of policy regarding the execution. This includes in particular the explanation and application of the arm’s length principle in relation to transactions between related parties and the allocation of profits between headquarter and permanent establishment.

 

Click here to be forwarded to the Decree by which the Dutch State Secretary of Finance announced its decision to incorporate a Coordination Group for Transfer Prices.

 

 

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