In this concise guide, we’ll cover the key aspects of transfer pricing documentation, its significance, and how to maintain compliance.

What is Transfer Pricing Documentation?

Transfer pricing documentation is a set of records used by multinational companies to justify fair pricing for cross-border transactions between related entities. It’s vital to uphold the arm’s length principle.

In the Netherlands, businesses must prepare Dutch Transfer Pricing Documentation to comply with regulations. This record is crucial for defending against potential tax authority audits, penalties, and disputes.

For international businesses, adhering to Dutch Transfer Pricing Documentation requirements is essential. It ensures transparency, fairness, and compliance with Dutch regulations.

To maintain compliance:

1. Know Local Requirements: Be aware of specific documentation requirements in each country of operation.
2. Collect Accurate Data: Gather precise financial and operational data, including transaction records and relevant contracts.
3. Document the Process: Carefully record the process used to determine transfer prices and any adjustments made.
4. Keep Records Updated: Regularly update documentation to reflect changes in the business, market conditions, or regulatory requirements.
5. Seek Expert Assistance: Consider professionals experienced in transfer pricing regulations to ensure compliance.

Threshold for Compliance	Consolidated group revenues of less than EUR 50 million
Documentation Requirements	– General transfer pricing documentation must be prepared to substantiate the arm’s length nature of any intercompany transaction. – Documentation must be provided to the Dutch Tax Authorities on request.
Timing of Compliance	Documentation must be provided to the Dutch Tax Authorities on request.
Consequences of Non-Compliance	– The burden of proof regarding the arm’s length nature of the transfer price may eventually shift to the taxpayer. – If the Dutch Tax Authorities consider the conditions of the intercompany transaction not to be in line with the arm’s length principle, it can adjust taxable profits and impose financial penalties plus interest, depending on the adjusted taxes payable.

Transfer pricing documentation is essential for tax compliance and risk mitigation. Our accounting and tax firm is ready to assist you in creating and maintaining comprehensive documentation, ensuring that your company adheres to best practices and global regulations.