1. In your jurisdiction, are taxpayers obliged to maintain transfer pricing documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?
With respect to transactions with related entities (Dutch and foreign) there is an obligation to maintain transfer pricing documentation. It applies (potentially) to all corporate entities.
2. What is the content of the documentation that must be prepared?
The rules are brief and rather general: they state that the entity must have information in its control showing how the transfer price has been determined, and from that information one must be able to demonstrate that the agreed price and conditions are such that independent parties would have agreed to them.
a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?
All transactions with associated enterprises.
b) What is the definition of “associated enterprises” for the purposes of this requirement?
There is no clear definition of associated entities for the transfer pricing documentation rules. According to the general rule, entities are considered to be associated (in this respect) where they are related via shareholding and / or management.
c) For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on transfer pricing documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?
The Dutch rules on transfer pricing documentation are very brief and general, and they are not similar to those described in the EUTPD Code of Conduct.
d) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?
Taxpayers which are not established in the Netherlands are not obliged to provide information. In order to oblige an entity to provide information, the entity must reside in the Netherlands or be subject to Dutch tax.
Under certain circumstances, the Dutch tax authorities have a limited right to request a Dutch taxpayer to provide information about a foreign entity related to the Dutch entity.
e) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?
Dutch tax law does not (explicitly) require comparable studies to be provided. On the other hand, it may prove useful to have such a study in some cases. If so, it is not required to be in any given format.
f) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?
There are no clear rules in this respect, except that the tax authorities should be able to understand the documents in English. It is commonly accepted that documentation may be in Dutch or English.
3. What is the deadline or timescale for providing transfer pricing documentation to the tax authorities (is it to be provided for example upon filing of the tax returns, at the beginning of a tax audit, or on the specific request of the tax authorities)?
In principle, the taxpayer must have the documentation available from the moment that the transaction takes place. In practice, however, it is sufficient if the documentation is provided within a reasonable period after the tax authorities request for it (generally six weeks).
4. In the event that the documentation is not provided within the applicable timescale, or is incomplete, do documentation-related penalties apply in your jurisdiction? If so, please detail the penalties and the circumstances in which they do and do not apply.
There are no documentation-related penalties in the Netherlands.
5. Does the absence or incompleteness of documentation reverse the burden of the proof as regards the arm’s length character of the transactions?
If the taxpayer fails to provide appropriate documentation, the burden of proof may shift to the taxpayer.
6. In the event that the tax authorities (i) impose documentation-related penalties and (ii) make a transfer pricing reassessment, does the imposition of documentation-related penalties prevent the taxpayer from initiating any mutual agreement procedure which may be contained in an applicable tax treaty (or, for EU countries, the procedure contained in the EU Arbitration Convention) with a view to eliminating any double taxation resulting from the transfer pricing reassessment?
A penalty or shifting of burden of proof does not prevent the taxpayer requesting a mutual agreement procedure.