1. Newtransfer pricing requirements
For bookyearsas from 1 January 2016, new transferpricingrequirementshave beenimplemented
for Dutch tax payers.
Importantisthe introductionof anadditional obligationforDutchentitiesthatare part of a group
witha consolidatedturnoverof atleastEUR 50 mio.to include amasterfile andlocal file intheir
administration.
The obligationshouldbe metwithin the termforfilingthe Dutchcorporate income tax return.
Failure tocomplywiththe newrequirementsmayresultinadministrative penalties.
Additionto already existingregulations
Thisobligationappliesinadditiontothe documentationrequirementof article 8bof the Corporate
Income Tax Act,whichcontinuestoapplyforall tax payersandalso appliesfortax payersthatare
part of a groupthat doeshave a group turnoverof at leastEUR 50 mio.
Additional TP documentationrequirements
Accordingto the newregulations,Dutchentitiesthatare part of a group witha consolidated
turnoverof at leastEUR 50 mio.will have tomeetadditional documentationrequirementsthatare
more strict thanthe existingDutchdocumentationrequirements.
Obviously,existingdocumentationrequirementsremainapplicable forDutchtax residentgroup
entitiesthatare part of a groupwitha consolidatedturnoverof lessthanEUR 50 mio.
Dutch entitiesthatfall underthe scope of the new legislation,will have toincludea so-calledmaster
file anda local file intheiradministration.Bothmasterfile andlocal file have tomeetspecific
requirements.
The master file
The master file hastoinclude anoverview of the enterprise of the multinational group.Thisoverview
has to include the followingelements:
• The nature of the businessactivitiesof the group;
• The transferpricingpolicyof the group;
• The allocationof income withinthe group;
• The allocationof economicactivitieswithinthe group.
The local file
The local file hastoinclude informationthatisrelevantforthe transferpricinganalysisof
transactionsbetweenthe Dutchtaxpayerandarelatedforeigngroupcompany.

2. The local file isintendedtosubstantiatethatthe transactionsinwhichthe Dutchgroup companyis
involved,take place underatarm’slengthconditions.
If the Dutch groupcompanyhas foreignpermanentestablishments,the local file shouldalsoinclude
informationthatsubstantiatesthatthe allocationof profitstothe permanentestablishmentsisat
arm’s length.
The master file andthe local file canbe draftedinthe Dutch or Englishlanguage.
As these measureswill applyforbookyearsstartingon1 January2016, any Dutch entitythatispart
of a groupwitha consolidatedturnoverof at leastEUR 50 mio.,shouldverifywhetheritcanmeet
these newrequirements.
How we can helpyou
If the company ispart of a group that hasa groupturnoverof at leastEUR 50 mio.,we recommend
discussingyourtransferpricingsystemwithusshortly.If yourtransferpricingsystemneedsany
adjustmentstobe compliant,we canassistyouwiththe implementationof acompliantsystem.
We can of course alsoassistyouwiththe preparationof transferpricingdocumentationthatmeets
these newrequirements.If youalreadyhave transferpricingdocumentation,we canverifywhether
your existingdocumentationmeetsthe new requirementsorhasto be adjusted.
As mentionedinthe above,administrative penaltiesapplyif companiesdonotmeetthe new
requirementstimely.
Groupswith turnover exceedingEUR750 million
If your company is part of a group witha turnoverof more than EUR 750 million,youwill alsohaveto
meetthe detailedrequirementsforcountry-by-country(“Cbc”) reportingthathave beenproposedin
the same legislative proposal.The rulesforCbc-reportingvaryforDutchentitiesthatare considered
as the ultimate parententityof the groupand Dutch entitiesthatare part of a groupwitha foreign
parententity.
Please note thatthe requirementstohave amaster file andalocal file andthe Cbc-rulescanapply
cumulatively.
Contact details
For any advice inthismatteryoucan contact me at 0031882368105 or peter.janssen@flynth.nl