The Dutch Deputy Minister of Finance has issued a new decree that generally unifies and clarifies prior transfer pricing guidance, and withdraws and cancels prior decrees from 2001 and 2004. The new decree is effective from 27 November 2013.
The arm’s length principle remains the starting point for transfer pricing, in line with the OECD transfer pricing guidelines. The decree addresses the following areas:
1. Intra-group services;
2. Financing transactions including non-business motivated loan;
3. Non-business motivated profit shifting (in particular concerning intangible fixed assets, central purchasing within the group, and internal insurance/reinsurance activities); and
4. Guarantees.
The Decree combines and replaces two previous decrees on transfer pricing and contains a number of new sections in the light of specific developments in Dutch case law and the developments with respect to the OECD’s project on transfer pricing aspects of intangibles.
The Decree provides important insights into the Dutch tax administration’s position in applying the arm’s length principle in general and into specific types of common inter-company transactions.
