Netherlands – Transfer Pricing (2025)

Legal framework and scope

The arm’s length principle is codified in Dutch law through Article 8b of the Dutch Corporate Income Tax Act 1969 (CIT Act). Article 8b applies where an entity participates, directly or indirectly, in the management, control or capital of another entity, or where the same entity participates, directly or indirectly, in the management, control or capital of both entities. Administrative elaboration and practical guidance are contained in the Transfer Pricing Decree of 14 June 2022 (reference 2022-0000139020), which develops aspects of the application of Article 8b CIT Act.

Arm’s length principle and role of the OECD Guidelines

Although the OECD Transfer Pricing Guidelines (TPG) are not directly incorporated into Dutch legislation, the Transfer Pricing Decree of 2022 recognises the TPG as internationally accepted guidance that explains and clarifies the application of the arm’s length principle. In practice, Dutch tax authorities follow the substance and approach of the OECD Guidelines regarding method selection, comparability analysis, ranges, adjustments and the avoidance of hindsight.

Definition of related parties

The domestic statutory reference for related‑party treatment is Article 8b CIT Act. The article establishes the conditions under which the arm’s length principle is applied based on direct or indirect participation in management, control or capital. The Transfer Pricing Decree (14 June 2022) provides administrative interpretation and examples to apply Article 8b in practice.

Methods and application criteria

The Dutch framework, as set out in the Transfer Pricing Decree (14 June 2022, 2022-0000139020), includes the standard transfer pricing methods listed in the OECD Guidelines: Comparable Uncontrolled Price (CUP), Resale Price Method, Cost Plus, Transactional Net Margin Method (TNMM) and Profit Split. The Dutch regime does not impose a legal hierarchy of methods. Instead, the applicable criterion is the “most appropriate method” approach; taxpayers must select the method that is most appropriate based on facts and circumstances, and the taxpayer’s choice must produce an arm’s length outcome. Dutch practice follows the guidance of the OECD TPG where national law is silent.

Comparability analysis and ranges

The Netherlands follows Chapter III of the TPG for comparability analysis. There is no general preference for domestic comparables; foreign comparables are accepted provided geographic differences do not have a material impact on comparability. Pan‑European comparables are generally acceptable. The use of “secret comparables” is not permitted except for case selection and Mutual Agreement Procedure (MAP) purposes. The Netherlands allows the use of arm’s length ranges and statistical measures such as interquartile ranges and percentiles in line with the OECD Guidelines. Comparability adjustments are not specified in detail in domestic law, but, consistent with the TPG reference, adjustments are required where necessary and when they improve comparability.

Documentation and reporting (Master, Local, CbC)

Dutch law requires taxpayers to prepare transfer pricing documentation. Article 8b paragraph 3 CIT Act requires taxpayers to document and substantiate all intragroup transactions. This documentation obligation is form‑free and applies without thresholds, therefore applying also to small and medium sized enterprises; preparing a local file satisfies this requirement. The domestic legislation on Country‑by‑Country Reporting (CbCR), master file and local file is aligned with the OECD model legislation and has been effective since 1 January 2016. Specific thresholds are set for filing obligations: the CbCR obligation does not apply to group entities of a multinational group that achieved less than EUR 750,000,000 in consolidated group revenue in the reporting year immediately preceding the reporting year to which the CbC report would relate. The obligation to prepare a master file and local file applies to group entities of a multinational group that, in the reporting year immediately preceding the relevant year, generated at least EUR 50,000,000 in consolidated group revenues. Documentation may be prepared in English or Dutch. There is no filing requirement for the master file and local file, but documentation must be available at the time the taxpayer is required to file its tax return for the same year. The relevant legal references include Article 8b and Articles 29b through 29h CIT Act.

Safe harbours and simplification measures

The Transfer Pricing Decree includes specific simplifications in certain areas. For low value‑adding intra‑group services, the Decree adopts the OECD low value‑adding services approach, including a 5% mark‑up where conditions are met (Transfer Pricing Decree, paragraph 6). Regarding guarantees, the Decree provides a safe harbour: if an arm’s length guarantee fee cannot be determined (within a range) in an individual case, the Netherlands is prepared to accept that the guarantee fee is set at half of the benefit obtained by the guarantee recipient (Transfer Pricing Decree, paragraph 9.4.3). Exemptions to documentation obligations align with the thresholds noted above: CbCR exempt below EUR 750,000,000 consolidated revenue; master/local filing obligations triggered from EUR 50,000,000 consolidated revenue.

APAs, MAP and dispute prevention/ resolution

The Netherlands offers a broad set of administrative instruments to prevent and resolve transfer pricing disputes. Available mechanisms include tax rulings under the Tax Ruling Decree of 19 December 2023 (2023-00000020007), enhanced engagement and cooperative compliance programmes, unilateral, bilateral and multilateral Advance Pricing Agreements (APAs), the International Compliance Assurance Programme (ICAP), and Mutual Agreement Procedures (MAP) governed by the MAP Decree of 11 June 2020 (2020-0000101607). The Netherlands also undertakes multilateral and joint audits and publishes a MAP profile that provides further details about procedural aspects and timing.

Sanctions and other considerations (secondary adjustments, year‑end adjustments, PEs)

There are no transfer pricing specific penalties in Dutch law; nevertheless, general tax penalty rules may apply and the evidentiary burden can shift to the taxpayer as in other corporate tax adjustments. Year‑end adjustments are permitted in the Netherlands and can be required when they produce an arm’s length outcome. The Netherlands recognises secondary adjustments: generally a secondary transaction is required to reflect the economic substance after a primary transfer pricing adjustment. Regarding attribution of profits to permanent establishments, the Netherlands issued a Decree on profit allocation to permanent establishments 2022 and follows the Authorized OECD Approach (AOA) as described in the 2010 Report for profit attribution. Treaty practice varies: the Netherlands has Article 7 as it reads after 2010 in 14 treaties, while other treaties contain different formulations. Additional legislative measures include rules to eliminate double non‑taxation resulting from transfer pricing mismatches (Articles 8ba, 8bb, 8bc and 8bd CIT Act), effective 1 January 2022. These provisions limit a downward transfer pricing adjustment to the extent that a corresponding adjustment is included in the related party’s tax base, and condition adjustments to the tax basis of transferred assets and liabilities on corresponding adjustments by the transferor.

Conclusion

The Dutch transfer pricing framework combines the statutory arm’s length rule in Article 8b CIT Act with detailed administrative guidance in the 2022 Transfer Pricing Decree and related decrees. The approach is closely aligned with the OECD Guidelines: taxpayers must apply the most appropriate method, substantiate transfer pricing with documentation (available in English or Dutch), and may use foreign comparables and statistical ranges where justified. The Netherlands provides targeted simplifications such as the low value‑adding services mark‑up and a guarantee safe harbour, and offers comprehensive dispute prevention and resolution mechanisms including rulings, APAs and MAP.

References

For further information and country profiles on transfer pricing, see https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html