The Netherlands: Proposed legislation

On 15 September 2015 proposed legislation was published, which contains modifications to the 1969 Dutch Corporate Income Tax Act in order to implement the three-tiered transfer pricing documentation requirements as recommended by the OECD in the new Chapter V to the OECD Transfer Pricing Guidelines, published in September 2014 under the Base Erosion and Profit Shifting (BEPS) project.

According to the draft legislation, the Country-by-Country Report (CBCR), the master file and the local file requirements will be applicable for fiscal years starting on or after 1 January 2016.

The CBRC will be required for Dutch tax resident entities that are members of a multinational enterprise (MNE) group, with a consolidated group turnover exceeding EUR 750 million.

The master file and the local file will be required for Dutch tax resident entities of an MNE group if the group has consolidated group turnover exceeding EUR 50 million.

For smaller groups, the current, flexible Dutch transfer pricing documentation requirements will continue to apply; this to avoid imposing burdensome administrative requirements for such smaller companies.

The master file and the local file must be available at the level of the Dutch entity at the moment of filing the tax return. The CBCR must be filed within 12 months after the last day of the fiscal year. Documentation may be prepared in Dutch or in English, and a decree with detailed guidance on the exact requirements will be issued.

Because the requirements for the CBCR are matching the OECD recommendations, the compliance with the expected new documentation requirements lends itself to be streamlined, using the tax technology solutions already available in the market. 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 stay in control of its transfer pricing affairs.