Transfer pricing documentation requirements in Dutch tax law

Dutch tax law provides for the general obligation for Dutch companies to keep an administration and provide information to the tax inspector about everything that can be relevant for the levy of Dutch taxes if so requested by the tax inspector.

This obligation includes the obligation to keep transfer pricing documentation to secure availability of the required information to assess whether the agreed upon transfer prices are at arm’s length.

Article 8b, paragraph 3 also provides for all related party transactions to which the at arm's length principle applies, that the tax payer must document how the internal prices have been determined (method applied), and circumstances that explain why these prices must be considered at arm's length.

The required information must be available to the tax authorities from the moment the transaction has taken place. The company must keep records with underlying documentation which demonstrates that the transfer prices are at arm’s length.

If the taxpayer fails to comply with the administrative requirement, the burden of proof as regards the arm’s length nature of the transfer prices applies will shift to the tax payer and the tax payer will have to demonstrate/ prove that the transfer prices are at arm’s length.

Finally, the Country by Country Reporting rules, requires the Dutch corporate tax payer to have specific information available on the transfer pricing, which is laid down in Country report, the Master file and Local file.