New transfer pricing documentation rules in the Netherlands
Following up on the measures included in OECD’s BEPS Action Plan 13, the amendment significantly expands Dutch TP regulations. A new chapter of ‘additional transfer pricing documentation requirements’ has been added to the Netherlands Corporate Income Tax Act, introducing contemporaneous documentation requirements and implementing country-by-county reporting.
Contemporaneous TP documentation requirements: master file and local file
A contemporaneous transfer pricing documentation requirement for Dutch group companies of multinational companies with consolidated annual revenues over EUR 50 million has been implemented. The annual TP documentation package should consist of a master file and a local country file. In a Regulation issued by the State Secretary of Finance on December 30, 2015, detailed instructions regarding the content of the master file and the local file have been provided.
The master file needs to contain detailed information regarding:
- Organisational structure of the group
- Description of the business
- Intangibles and R&D
- Intercompany financing
- Financial and tax positions
The local file needs to contain detailed information regarding:
- The organization and activities of the local (Dutch) entity
- Intercompany transactions
- Financial position
Dutch group companies are now required to have available TP documentation before the statutory deadline. The documentation needs to be updated annually.
In line with OECD recommendations, the Netherlands has implemented, as of 2016, country-by-country reporting (CbCR). CbCR applies to Dutch-headquartered multinational companies with consolidated revenues exceeding EUR 750 million. Aiming to increase transparency for tax administrations, CbCR requires multinational companies to annually file a comprehensive CbC-report, containing detailed information relating to the global allocation of the group’s income and taxes paid together with indicators of the location of economic activity within the MNE group.
Before the end of 2016, Dutch group companies of multinationals subject to CbCr need to inform the Dutch tax authorities which company in the group will file the CbC-report.