Dutch TP Docs and technology

January 28 2016

On 23 December 2015 new transfer pricing documentation requirements based on the OECD BEPS standards were enacted as Articles 29b-29b of the Dutch Corporate Income Tax Act. Following this change in law, the Dutch Ministry of Finance on 30 December 2015 issued Decision DB2015/462M on the new transfer pricing documentation requirements.

In general, the Dutch legislation and documentation requirements are in line with the OECD guidance in Action 13 on Transfer Pricing Documentation and Country-by-Country Reporting.

The law now explicitly states that transfer pricing documentation may be prepared in Dutch or in English, and Decision DB2015/462M details in both Dutch and English the information required for the master file, the entity file and the Country-by-Country Report.

As from 1 January 2016 Dutch resident entities that are part of a group with consolidated turnover of EUR 50 million or more must prepare and keep in their administration a master file and an entity file. Noteworthy is that such transfer pricing documentation must be available before the deadline for filing the corporate income tax return.

Some additional points regarding the Country-by-Country Report are:

Section 29f of the Corporate Income Tax Law explicitly makes it clear that a transfer pricing adjustment is not to be based solely on the country-by-country report. The Country-by-Country Report is to be used for risk assessment purposes by the tax administration.

Where data uncertainties need to be addressed, e.g. regarding source of financial information and the counting of full-time professionals, flexibility is allowed on condition that a consistent approach is applied from year to year.

The listing of group members in Table 2 of the Country-by-Country Report must not only include entity names but also tax identification numbers and address details for each entity, a requirement that seems to go beyond the original OECD guidance.

The Country-by-Country Report must be filed in XML.

Non-compliance with the requirement to produce and submit a country-by-country report can be subject to penalties as a criminal offence.

Because the new Dutch transfer pricing documentation requirements are in line with the OECD guidance in Action 13, compliance with the documentation requirements lends itself to be streamlined, using the tax technology solutions already available in the market such as TP Controller from Otico Software. A tax technology solution that links compliance to a single repository for storage, access and sharing of a corporate’s global TP data will furthermore allow a corporate to respond timely to requests for local documentation on a worldwide basis and to stay in control of its transfer pricing affairs.