Transfer Pricing / Value Chain Tax
More and more businesses broaden their horizons by trading in different countries. This provides ample opportunities, but obviously requires alertness: tax rules for international trade are changing all the time and it is therefore important to be able to continue to comply with (new) legislation, remain in control and implement (re) structuring projects as tax-efficiently as possible.
For tax purposes, international transactions (such as goods and services) between group companies and/or between head office and fixed establishments must take place on an arm's length basis. This must be laid down in transfer pricing documentation by means of a value and supply chain analysis.
Since 1 January 2016 documentation obligations in Dutch law have been tightened up substantially. The changes in Dutch law are a consequence of the so-called Base Erosion and Profit Shifting project (BEPS) which was initiated by the Organisation for Economic Cooperation and Development (OECD). This project promotes more tax coherence between different countries and requires more transparency by taxpayers on their tax position. Dutch entities and fixed establishments within a multinational group with a total group turnover of € 50 million or above, are subject to specific requirements regarding the form and content of the transfer pricing documentation. This documentation must be kept up-to-date on an annual basis. Dutch businesses that are part of a group with a total group turnover of less than € 50 million, are not subject to the stricter laws but they do have to document the arm's length nature of intercompany transactions. From the 2016 financial year, businesses with a minimum group turnover of €750 million are obliged to submit the so-called Country-by-Country reporting.
In the Netherlands there are strict penalties for not complying with administrative requirements for transfer pricing. The penalties range from reversal of the burden of proof to corrections and fines, possibly resulting in double taxation. Proper transfer pricing documentation ensures that you as a business are compliant and avoid discussions, penalties and potential damage to your reputation.
Always in control
In order to limit the transfer pricing risks to an absolute minimum, it is important that you, as a business, are in control of your commercial and tax position. This entails more than just complying with laws and regulations, you must proactively keep your documentation and implementation of transfer pricing up-to-date.
Would you like to know whether your business complies with transfer pricing documentation legislation? Are you expanding into another country or are you taking over an international business? Is a visit from the tax authorities due and you want to be prepared? BDO can help you at three levels in your transfer pricing issues:
- Compliance: by using our QuickScan we check whether your current transfer pricing documentation complies with the new laws and regulations and we can help you with any audits.
- Control: we help you collect and draw up the appropriate documentation as proof of your compliance, ensuring you are in control of your tax position.
- Planning: we check for you whether your current transfer pricing model suits the future plans of your organisation, for example in the event of a take-over, restructuring or implementation of a new business model. In this respect your current and future value chain are of crucial significance
Our global BDO network has more than 250 specialists in the field of transfer pricing / value chain tax. who all share their knowledge, so our transfer pricing / value chain tax advisers always have the most recent knowledge in their field at their disposal. This means you are not only assured of the best service, but also the best advice.
If you would like to know how BDO can give your organisation specific help with transfer pricing issues? Please contact us or download the transfer pricing flyer.