The newly updated Dutch transfer pricing guidance

On July 1, 2022, a new Dutch transfer pricing decree was issued by the Dutch State Secretary for Finance.

In cases where the OECD Transfer Pricing Guidelines leave room for interpretation or where additional clarification is required in practice, the new Dutch decree provides information on what the formal position is of the Dutch tax authorities with regard to the application of the arm's length principle with regard to a number of aspects.

In a series of five articles (to be) published in Bloomberg’s Tax Management International Journal, Monique van Herksen and Clive Jie-A-Joen provide insights into this new decree.

In the first article, the basic transfer pricing instructions included in the new Dutch transfer pricing decree are discussed and in particular the Dutch guidance related to the impact of subsidies and stimulus measures on intra-group transactions.

In the second article the most material change or update in the new Dutch Decree, the inclusion of extensive guidance on transfer pricing for financial transactions, is addressed.

The new Dutch decree largely copies new chapter X of the OECD Transfer Pricing Guidelines in this respect, but also presents an approach that deviates from previous practice and Dutch jurisprudence.

As the Dutch Tax Authorities apply a dynamic interpretation to the OECD Transfer Pricing Guidelines, they may very well consider the guidance on transfer pricing for financial transactions as further clarifications of the application of the arm’s length principle rather than new rules. Whether that will be feasible is still to be seen.

In the second article, the authors discuss the newly inserted transfer pricing guidance and positions of the Dutch Tax Authorities on financial transactions, as it applies to loans, cash pooling, guarantees and captive insurance.