Executive Summary
General Requirements
- Transfer pricing documentation requirements are codified in Article 8b(3) of the Corporate Income Tax Act 1969 for all taxpayers and supplemented by Articles 29b to 29h for larger multinational groups.
- The arm’s-length principle applies to any entity that participates directly or indirectly in the management, control, or capital of another entity.
- Documentation obligations extend to domestic transactions under Article 8b(3), though supplementary cross-border documentation rules apply specifically to larger entities.
- New legislation effective January 1, 2022, prevents double non-taxation by denying downward adjustments in the Netherlands unless a corresponding upward adjustment is taxed in the counterparty’s jurisdiction.
Documentation Requirements
- The Netherlands follows a three-tiered documentation approach consisting of a Master File, Local File, and Country-by-Country (CbC) Report for entities meeting specific revenue thresholds.
- Master and Local Files must be maintained in the taxpayer’s administration by the deadline for filing the annual corporate income tax return.
- CbC Reports are required for multinational enterprise (MNE) groups with a consolidated group turnover equal to or exceeding EUR 750 million.
- Formal CbC notifications must be submitted annually via a dedicated website before the end of the reporting group’s fiscal year.
Results of Non-Compliance
- Non-compliance with Master File or Local File requirements can be considered a criminal offense, potentially resulting in fines up to EUR 10,300 or detention.
- Failure to comply with CbC reporting obligations, including late or incorrect filing, may result in administrative fines reaching a maximum of EUR 1,030,000.
- Missing or incomplete transfer pricing documentation automatically shifts the burden of proof to the taxpayer to demonstrate the arm’s-length nature of their pricing.
- Intentional violations of the arm’s-length principle may lead to tax increases of up to 100% of the additional tax due, plus tax interest.
Country Specific Information
- The Dutch Tax and Customs Administration (DTCA) focuses heavily on the economic substance of transactions, particularly regarding alignment of functions and risks.
- Advanced tax rulings (including APAs) now require the taxpayer to demonstrate a “substantial economic nexus” in the Netherlands at the group level.
- Public Country-by-Country Reporting (PCbCR) legislation applies to financial years starting on or after June 22, 2024, for groups with global consolidated revenues exceeding EUR 750 million.
- To prevent double non-taxation, taxpayers bear the burden of proof to show that a corresponding upward adjustment has been included in the tax base of the foreign counterparty.
Compliance Table
| Document | Deadline | Language | Thresholds, Scope & Penalties |
| Master File | Included in records by the CIT return deadline (typically 5 months post-FY, extendable). | Dutch or English. | Mandatory for groups with consolidated revenue $\ge$ EUR 50 million. Applies to cross-border transactions. Penalties up to EUR 10,300. |
| Local File | Included in records by the CIT return deadline (typically 5 months post-FY, extendable). | Dutch or English. | Mandatory for groups with consolidated revenue $\ge$ EUR 50 million. Applies to cross-border transactions. Penalties up to EUR 10,300. |
| CbC Notification | Last day of the MNE group’s fiscal year. | Dutch or English. | Mandatory for groups with consolidated revenue $\ge$ EUR 750 million. Applies if the UPE is in a jurisdiction without CbC exchange. |
| CbC Report | Within 12 months after the end of the MNE group’s fiscal year. | Dutch or English. | Mandatory for groups with consolidated revenue $\ge$ EUR 750 million. Fines up to EUR 1,030,000 for non-compliance. |
| Other / SMEs (Art 8b(3)) | Must be contemporaneous and available upon request (4 weeks to 3 months to prepare if not ready). | Dutch or English. | No financial threshold. Mandatory for all entities with related-party transactions (domestic and cross-border). Failure leads to shift in burden of proof. |
Disclaimer: This information is obtained from secondary sources and is included for informative purposes. It should be confirmed by a local advisor.
