New Dutch guidance regarding transfer pricing

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

In two published articles, which are part of 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 the new Dutch transfer pricing guidance, published in July of this year.

The new Dutch guidance as regards transfer pricing for intangibles and transfer pricing for intra-group services, have been highlighted separately, as the new Dutch Decree addresses a myriad of issues.

From the article regarding intangibles, it becomes clear that MNEs will be required to carefully delineate the Development, Maintenance, Protection and Enhancement (DEMPE) functions performed by the MNE entities related to the IP, in order to substantiate that the income allocation for transfer pricing purposes to the respective MNEs is acceptable. IP use and IP related income allocations are popular transfer pricing audit issues.

The article regarding intra-group services, another low-threshold transfer pricing audit topic, concludes that the new guidance indicates that rendering services intercompany at cost, without a profit margin is likely to require some substantiation.