The NetherlandsTransfer Pricing Country ProfileUpdated July 2021SUMMARYREFERENCEThe Arm’s Length Principle1Does your domestic legislation orregulation make reference to theArm’s Length Principle? YesArticle 8b CIT Act NoThe arm's length principle is codified in article 8b of the Dutch Corporate IncomeTax Act 1969 (“CIT Act”).2What is the role of the OECD TransferPricing Guidelines under your domesticlegislation?The OECD Transfer Pricing Guidelines (“TPG”) are not incorporated in Dutch Transfer Pricing Decree, April 22, 2018, 2018legislation, however based on the Dutch Transfer Pricing Decree, the TPG are 6865considered as internationally accepted guidance providing explanation andclarification of the (application of the) arm’s length principle.3Does your domestic legislation orregulation provide a definition ofrelated parties? If so, please provide thedefinition contained under yourdomestic law or regulation. YesArticle 8b CIT Act NoArticle 8b CIT Act (codification of the arm’s length principle) applies if an entityparticipates, directly or indirectly, in the management, control or capital of anotherentity, or the same entity participates, directly or indirectly, in the management,control or capital of both the first and second entity.Transfer Pricing Methods4Does your domestic legislation orregulation provide for transfer pricingmethods to be used in respect oftransactions between related parties? YesTransfer Pricing Decree, April 22, 2018,2018-6865, paragraph 3 NoIf affirmative, please check those provided for in your legislation or regulation:NetherlandsUpdated July 2021

CUPResalePriceCostPlusTNMMProfitSplitOther (If so,please describe) In the Netherlands, the transfer pricing methods are incorporated in the DutchTransfer Pricing Decree. The Decree includes all of the above methods.5Which criterion is used in yourjurisdiction for the application oftransfer pricing methods?Please check all that apply: Hierarchy of methods Most appropriate method Other (if so, please explain)Depending on the facts and circumstances, taxpayers have to choose one of the fiveaccepted transfer pricing methods. It is in principle up to the taxpayer to decidewhich method to apply, however, this must lead to an arm’s length outcome. TheNetherlands also follows the OECD TPG in this respect.6If your domestic legislation orregulations contain specific guidance oncommodity transactions, indicate whichof the following approaches is followed. For controlled transactions involving commodities, the guidance contained inparagraphs 2.18-2.22 of the TPG is followed. Domestic legislation mandates the use of a specific method for controlledtransactions involving commodities (if so, please explain) Other (if so, please explain)The Netherlands does not have specific guidance on commodity transactions.However, the Netherlands follows the OECD TPG in this respect.Comparability Analysis78Does your jurisdiction follow (or largelyfollow) the guidance on comparabilityanalysis outlined in Chapter III of theTPG? YesIs there a preference in yourjurisdiction for domestic comparablesover foreign comparables? YesNetherlands No NoUpdated July 2021

The Dutch tax authorities accept foreign comparables as long as geographicdifferences have no material impact on the comparability. Comparables from thePan-European region are in the majority of cases accepted.9Does your tax administration use secretcomparables for transfer pricingassessment purposes? Yes NoThe Dutch tax authorities only use secret comparables for case selection and MAPcases.1011Does your legislation allow or requirethe use of an arm’s length range and/orstatistical measure for determiningarm’s length remuneration? YesAre comparability adjustmentsrequired under your domesticlegislation or regulations? YesTransfer Pricing Decree, April 22, 2018,2018-6865, paragraph 2 No NoThere are no specific provisions regarding comparability adjustments in theNetherlands. However, and given the reference to the TPG, comparabilityadjustments are required, when necessary and provided that the adjustmentsincrease comparability.Intangible Property12Does your domestic legislation orregulations contain guidance specific tothe pricing of controlled transactionsinvolving intangibles? Yes NoTransfer Pricing Decree, April 22, 2018,2018-6865, paragraph 5The Dutch Transfer Pricing Decree contains specific guidance on certain issuesrelated to the transfer pricing aspects of intangibles.13Does your domestic legislation orregulation provide for transfer pricingrules or special measures regardinghard to value intangibles (HTVI)?14Netherlands YesHTVI Implementation Questionnaire NoThe Dutch Transfer Pricing Decree incorporated the OECD’s guidance on hard tovalue intangibles. YesArticle 12b CIT Act.Updated July 2021

Are there any other rules outsidetransfer pricing rules that are relevantfor the tax treatment of transactionsinvolving intangibles? NoTaxpayers can under specific conditions apply the Dutch innovation box regimewhich includes a lower corporate income tax rate on qualifying profits.Intra-group Services15Does your domestic legislation orregulations provide guidance specific tointra-group services transactions? YesTransfer Pricing Decree, April 22, 2018,2018-6865, paragraph 6 NoThe Dutch Transfer Pricing Decree describes intra-group services, shareholderactivities and mixed activities. The Decree contains several examples on whether acharge for a service can be considered as arm’s length.16Do you have any simplified approachfor low value-adding intra-groupservices? YesTransfer Pricing Decree, April 22, 2018,2018-6865, paragraph 6 NoThe Dutch Transfer Pricing Decree incorporated the OECD’s approach on low valueadding services, including the mark-up of 5%.17Are there any other rules outsidetransfer pricing rules that are relevantfor the tax treatment of transactionsinvolving services? Yes NoFinancial Transactions18[NEW] Does your domestic legislationor regulations provide guidance specificto financial transactions? Yes NoTransfer Pricing Decree, April 22, 2018,2018-6865, paragraph 9, 10 and 11The Dutch Transfer Pricing Decree contains sections on loans, captives andguarantees.19[NEW] Are there any other rulesoutside transfer pricing rules that arerelevant for the tax treatment offinancial transactions? YesA.o.: article 10a, 10b, 13ab and 15b CIT Act NoAnti-abuse rules might apply to limit the deduction of interest. These anti-abuserules vary from the 30% EBITDA rule (BEPS Action plan 4 / ATAD) to limitationson interest deductions on related party financing transactions.NetherlandsUpdated July 2021

Cost Contribution Agreements20Does your jurisdiction have legislationor regulations on cost contributionagreements? YesTransfer Pricing Decree, April 22, 2018,2018-6865, paragraph 7 NoThe Dutch transfer pricing Decree contains specific guidance on certain issues relatedto cost contribution agreements including several examples.Transfer Pricing Documentation21Does your legislation or regulationsrequire the taxpayer to preparetransfer pricing documentation? Yes NoArticle 8b and Articles 29b up and toincluding 29h CIT ActIf affirmative, please check all that apply: Master file consistent with Annex I to Chapter V of the TPG Local file consistent with Annex II to Chapter V of the TPG Country-by-country report consistent with Annex III to Chapter V of theTPG Specific transfer pricing returns (separate or annexed to the tax return) Other (specify):Article 8b paragraph 3 of the CIT Act requires taxpayers to document and substantiateall intercompany transactions in transfer pricing documentation. As no thresholdapplies to this obligation, this also applies to small and medium sized companies.This documentation requirement is form free. Companies that prepare a local fileautomatically fulfill this requirement.22Please briefly explain the relevantrequirements related to filing oftransfer pricing documentation (i.e.timing for preparation or submission,languages, etc.)The Dutch legislation on CbCR, master file and local file is in line with the OECDmodel legislation. The legislation applies on January 1, 2016. The documentationmay be prepared in English or in Dutch.Article 8b and Articles 29b up and toincluding 29h CIT ActThere is no requirement to file the master file and local file, however thedocumentation must be available at the moment the taxpayer is required to file its taxreturn for the same year.Taxpayers that prepare transfer pricing documentation based on Article 8b CIT Act,need to keep this documentation in their administration, so also for thisdocumentation there is no filing requirement.NetherlandsUpdated July 2021

23Does your legislation provide forspecific transfer pricing penaltiesand/or compliance incentives regardingtransfer pricing documentation? Yes NoPenalties may be levied and the burden of proof may shift to the taxpayer.24If your legislation provides forexemption from transfer pricingdocumentation obligations, pleaseexplain.N/AAdministrative Approaches to Avoiding and Resolving Disputes25Which mechanisms are available inyour jurisdiction to prevent and/orresolve transfer pricing disputes?Please check those that apply: Rulings Enhanced engagement programs Advance Pricing Agreements (APA)Tax Ruling Decree, June 19, 2019,2019/13003Mutual Agreement Procedures (MAP)Decree of June 11, 2020, nr. 20200000101607 Unilateral APAs Bilateral APAsNetherlands’ MAP Profile Multilateral APAs Mutual Agreement Procedures Other (please specify): Multilateral and Joint auditsPlease refer to the MAP profile of the Netherlands.Safe Harbours and Other Simplification Measures2627Does your jurisdiction have rules onsafe harbours in respect of certainindustries, types of taxpayers, or typesof transactions? YesDoes your jurisdiction have any othersimplification measures not listed in thisN/ANetherlands NoThe Netherlands has incorporated the OECD’s low value adding services approachwhich could be considered as a safe harbour (see question 16).Updated July 2021

questionnaire? If so, please provide abrief explanation.Other Legislative Aspects or Administrative Procedures28Does your jurisdiction allow/requiretaxpayers to make year-endadjustments? Yes NoIn the Netherlands, a year-end adjustment is possible if this leads to an arm’s lengthoutcome.29Does your jurisdiction make secondaryadjustments? Yes NoFrom the Dutch point of view, a secondary transaction is in general necessary forrecognition of the transfer pricing adjustment.Attribution of Profits to Permanent Establishments30[NEW] Does your jurisdiction followthe Authorised OECD Approaches forthe attribution of profits to PEs (AOA)? YesThe policy of the Netherlands is to include the AOA in all treaty negotiations. No31[NEW] Does your jurisdiction followalso another approach? Yes NoWe prefer the AOA approach.Other Relevant Information32Other legislative aspects oradministrative procedures regardingtransfer pricingNetherlandsN/AUpdated July 2021

33Other relevant information (e.g. whetheryour jurisdiction is preparing new transferpricing regulations, or other relevantaspects not addressed in thisquestionnaire)The Dutch Transfer Pricing Decree was published in 2018. Currently an update ofthe decree is being prepared. The update will include a.o. the new chapter X of theTPG on financial transactions.In addition, new legislation is currently being prepared regarding the application ofthe arm’s-length principle. The draft legislation states that if a transaction is not basedon arm’s-length conditions, a downward adjustment of the taxable income will onlybe applied to the extent a corresponding upward adjustment is included in the taxableincome of the counterparty. With this legislation the Netherlands aims to combattransfer pricing mismatches in order to avoid international double non-taxation.For more information, please visit: herlandsUpdated July 2021