1 April 2021

Rezan Ökten, Chantal Presilli, Nino Husken, and Gijs van Koeveringe responded on Houthoff's behalf to the consultation document on the proposed legislation which aims to unilaterally address transfer pricing mismatches.

A transfer pricing mismatch occurs when Dutch taxable income is adjusted downwards based on the application of the arm's length principle, but the foreign jurisdiction involved in the cross-border intragroup transaction does not make a corresponding upward adjustment. The proposed legislation does not grant the downward adjustment if the corresponding amount is not taxed or fully taxed at the level of the related foreign entity.

The authors believe that the proposed legislation infringes EU law and that the text of the legislation raises further questions. It is not clear why the proposed legislation should materially apply retrospectively. In addition, we think it is undesirable that taxpayers will bear the burden of proof. We would prefer it if counteracting mismatches was coordinated at a European level.

You can read the authors' critical comments here.

*This publication is only available in Dutch. The English version will follow soon.