DLA Piper Netherlands

One of the key benefits of the Dutch tax system is the participation exemption regime, whereby benefits derived by Dutch corporate taxpayers from a qualifying shareholding (i.e. dividends, capital gains, and foreign exchange results) are fully exempt from Dutch corporate income tax (25%). This beneficial treatment of the participation exemption regime also applies to earn-out payments whereby the deferred instalment payments depend upon the performance of the company being sold.

Rachit Agarwal and Jian-Cheng Ku of DLA Piper discuss the transfer pricing (TP) aspects of a business restructuring within a multinational enterprise (MNE) group, through reference to a recent high-stakes Dutch court case. The case highlights the importance of TP documentation as evidence in tax litigation and in conducting an appropriate TP valuation.