The Dutch Ministry of Finance published an unofficial English translation of a Decree regarding transfer prices, the application of the arm's length principle and the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines) (in short the Transfer Pricing Decree 2022). The Dutch version of the Decree was already published on July 1, 2022 in the Dutch State Gazette.


Although the Dutch version of the Decree was already published on July 1, 2022 the English version of the Decree was only published on July 1, 2023.


Reason for this Decree

This Decree replaces the Decree of the State Secretary for Finance of 22 April 2018, no. 2018-6865, Government Gazette 2018, 26874. This Decree addresses, inter alia, recent developments that have led to changes to the OECD Guidelines. Insofar as these changes further clarify the application of the arm’s length principle, I am of the opinion that these amendments also apply to years in which these changes were not yet published.


Key changes compared with the previous Decree are:

  • Amendment of the section on financial transactions;
  • Amendment of section 6 of this Decree on intra-group services;
  • Expansion of the section on government policy, with a subsection on government support measures in response to the COVID-19 pandemic, for example; and
  • Textual changes to bring the terminology more into line with that used in the OECD Guidelines and in Dutch legislation.


In the past years, the OECD Guidelines have changed, also as a result of the BEPS project. The OECD Guidelines are still being developed and will continue to be regularly expanded and amended in the future. If necessary, this Decree will be replaced by a new Decree in response to new developments.


Subjects discussed in the Decree

In the Decree a.o. the following subjects are being discussed:

  • Application of the arm’s length principle (chapters I and III)
    • Introduction
    • Characterisation of the transaction
    • Disregarding the transaction
    • Comparability analysis
    • Aggregation of transactions (paragraphs 3.9 to 3.12)
    • The use of the arm’s length range (paragraphs 3.55 to 3.66)
    • Use of multiple year data (paragraphs 3.75 to 3.79)
    • Government policy
      • The effect of government policy (paragraphs 1.152 to 1.156)
      • Grants, tax incentive measures and partly deductible costs
      • Support measures
    • Requests for reduction of a transfer pricing adjustment (paragraphs 3.13 to 3.17)
  • Transfer pricing methods (chapter II)
    • Introduction
    • Points to consider when applying cost-based transfer pricing methods
      • Budgeting versus actual costs
      • Cost base and disbursements
      • Cost-related remuneration for sales of goods through an intermediary
    • Valuation methods (sections D.2.6.3 and D.2.6.4 of chapter VI)
  • Secondary adjustments (paragraphs 4.68 to 4.78)
  • Tangible/intangible fixed assets
    • Transactions concerning tangible/intangible fixed assets
    • Determination of the arm’s length price when the valuation at the time of the transaction is highly uncertain (paragraphs 6.181 to 6.185)
    • Hard-to-value intangibles (paragraphs 6.186 to 6.195)
    • The purchase of shares in an independent entity followed by a business restructuring
    • The determination of the remuneration for the use of intangible assets
  • Intra-group services (chapter VII)
    • Application of the arm’s length principle
    • Shareholder activities and mixed activities (paragraphs 7.9 to 7.10)
      • List of shareholder activities
      • Mixed activities
      • Examples
    • The simplified method for low value-adding services (paragraphs 7.43 to 7.65)
    • Contract research and contract manufacturing
  • Contributions to a cost contribution arrangement (CCA) (chapter VIII)
    • Introduction
    • Examples
  • Intra-group procurement (section D.8 of chapter I)
  • Financial transactions
    • Loans
      • Characterisation of the transaction
      • The two-sided perspective
      • Credit rating and investment grade
      • Implicit support
      • The arm’s length interest rate
      • Dutch case law
    • Financial service entities
      • Intra-group financial service activities
      • Examples
    • Cash pooling
      • Characterisation of the transaction
      • Benefits of the cash pool
      • Cross-guarantees within the cash pool
    • Guarantees
      • Characterisation of the transaction
      • The arm’s length guarantee fee
      • Cross-guarantees within the group
    • Captives
      • Characterisation of the transaction
      • Insured risk and insurance risk
      • Passive pooling of insurance risks
      • Insurance as a by-product
      • Sale of insurance via an agent
    • The documentation requirement
      • Country-by country report, master file and local file
      • Article 8b documentation
    • Early consultation about possible double taxation

The English Translation of the Decree can be downloaded here from the website of the Dutch Ministry of Finance.


The (Official) Dutch version of the Decree can be found here.


The Dutch Ministry of Finance also published an unofficial English translation of a Decree regarding the profit attribution to permanent establishments. More information on that matter can be found in our article from August 3, 2023.



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