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Netherlands: Implementation of master and local filing


Patrick Schrievers

Mark de Vaan

Since the introduction of BEPS Action 13, a lot of countries have implemented, or are implementing, new transfer pricing documentation obligations for multinational groups in their domestic law. Such obligations have also entered Dutch law and have effect from financial years beginning on or after January 1 2016. Dutch law, decrees and policy, covering country-by-country reporting (CbCR) and master and local filing, are in line with what was agreed by the OECD and G20. Based on these obligations, multinational companies with a consolidated group turnover of €750 million ($857 million) or more must file an annual CbC report. In addition, Dutch taxpayers that are part of a multinational group with a consolidated turnover of at least €50 million in the preceding year should prepare an OECD-style master and local file for transfer pricing and branch allocation documentation purposes.

Article 29e of the Corporate Income Tax (CITA) Law states that the Dutch requirements for the master and local files will be provided by a ministerial decree. On December 30 2015 these specific requirements were made publicly available by the State Secretary of Finance. Some other countries have made country-specific changes, but the Netherlands has implemented the Action 13 documentation requirements without any reservations or changes. Taxpayers need to be aware of country-specific changes. For instance, the threshold for filing an Action 13 style master and local file in Germany is defined at a group turnover of €100 million or more. This may result in different filings in the Netherlands and Germany. Dutch subsidiaries of a German multinational with, for instance, a group turnover of €75 million should check which obligations need to be satisfied (i.e. Netherlands or German filing requirements).

The master and local file should be in the administration of the taxpayer covering financial years starting on or after January 1 2016. The deadline for having this documentation in place equals the annual CIT-return filing deadlines. Based on an extension granted by the double tax treaty (DTA), as requested, this may ultimately take 16 or 17 months from January 1 2016. If the master and local file are not available at that time, we expect that a notice will be sent by the DTA. The notice will likely contain a period within which the master and local file should be in place. If the files are ultimately not available a penalty may be imposed (Article 29h of CITA) of up to €20,500.

In day-to-day practice, taxpayers need to satisfy the new transfer pricing documentation obligations. Otherwise (besides penalties et al) the burden of proof in any disputes or court cases may shift to the taxpayer. It should be noted that the responsibility to prove transfer pricing statements made in tax returns ultimately belongs to the taxpayer. If a taxpayer is able to substantiate transfer pricing positions, the tax authorities need to state that the taxpayer is not meeting the arm's-length principle. However, by not meeting the master and local filing obligations, the burden of proof can be shifted back to the taxpayer. This tends to affect the positions between taxpayers and tax authorities and will feel like a disadvantage for taxpayers (who may have limited resources to discuss with tax authorities).

It should also be noted that the transfer pricing documentation obligations for multinational groups are intertwined with the application for the Netherlands preferential IP regime (innovation box). For innovation box rulings, that are preferential and relate to a low effective tax rate, there is an obligation to spontaneously exchange information to other states. Observing that the determination and allocation of R&D income to the innovation box is to a large extent based on the internal transfer pricing mechanisms (i.e. profit split method) there is a strong interaction with the master and local filing obligations (with a particular focus on intangibles in the master file).

We also would like to note that for most mid-sized multinational groups the new transfer pricing provisions do not necessarily have to be perceived as an administrative burden. For instance, the attribution of a low level of income to cross-border distribution and sales activities and the determination of R&D as a key value driver might strengthen the substantiation of a sound innovation box ruling that withstands the test of BEPS Action 5.

Patrick Schrievers ( and Mark de Vaan (


Tel: +31(0) 610 246 140 and +31(0) 627 328 647


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