Corporate tax service
Updated on 6 February 2024
Every Dutch company has to deal with taxes and the obligation to adhere to Dutch tax laws, as well as possible foreign tax laws if you do business internationally. When you own multiple corporations in different countries, you will also be subjected to foreign taxation laws and regulations, next to the applicable Dutch laws. This can create confusing situations, if you have no knowledge about which laws apply in any given scenario. If you want to make sure that your company adheres to all applicable laws and regulations, it is wise to seek advice from a professional third-party. Intercompany Solutions can assist you with any tax-related matter that affects your company. We therefore offer a broad range of corporate tax services for entrepreneurs who wish to establish a Dutch company, or already own a Dutch business. We will outline the entire scope of our corporate tax services on this page.
Advice about corporate tax in general
Intercompany Solutions advises a wide range of foreign and national clients about various tax-related topics, such as:
- Dutch domestic taxation
- International taxation
- Corporate tax compliance
- Tax reporting
- Tax returns
- Tax risk management
- National and international tax rulings
- Due diligence
- Transfer pricing
- Legal tax matters
Other areas we are actively engaged in include (but are not limited to) company establishment, investments, corporate structuring, mergers and acquisitions and company reorganizations. Due to many years of experience within these fields, we bring added value to your company by always being up-to-date regarding new laws and regulations, both nationally and internationally. We have already assisted thousands of entrepreneurs about the possibilities of owning a successful Dutch business, and we will continue to do the same for every new client we encounter. We are capable of analyzing the fiscal position of your business, provide you with advice about the most effective tax strategy in your case, and help you find appropriate solutions when anything goes wrong. In order to be able to inform you about what we do, we will explain the concept of corporate income tax below.
What is corporate income tax?
When you are the owner of a private or limited liability company, then you have to pay corporation tax on the profits of this company. Such companies are also called 'legal entities' by the Dutch Tax Authorities. For every ‘entity’ that is established in the Netherlands, you are lawfully obliged to submit a yearly corporate income tax return. Corporate income tax is calculated based on the taxable amount you earn in any financial year. Corporate income tax is thus levied on the profits of companies that are driven by legal entities, such as BVs and NVs. In some cases, other legal forms such as cooperatives, foundations and associations also need to pay corporate income tax, but only if, and insofar they run a business that actually generates any profits.
What are the current corporate income tax rates?
In the Netherlands, the income tax rate is higher than the corporate tax rates. This makes owning a Dutch BV a lucrative solution, especially when you plan to generate more than 200,000 euros in annual profit. Please keep in mind, though, that you also pay tax over dividends. If you want to know what the most cost-efficient option would be for you, please do not hesitate to contact Intercompany Solutions for personal advice. In addition, income tax has certain deductions for entrepreneurs that corporate income tax does not have. In short, it is always a matter of calculating every individual situation, when a choice for the Dutch BV is only based on obtaining tax benefits. The current corporate income tax rates in the Netherlands are as follows:
|< 200,000 euros
|> 200,000 euros
Corporate tax advice
When you want to be sure about the exact variety of taxes you will have to pay once you establish a Dutch business, it is advisable to inform yourself very well about all existing national taxes, as well as tax treaties the Netherlands has made with other countries. Because knowledge about this can save you an ample amount of money. As we already stated above, companies with a NV or BV legal form are obliged to pay corporation tax, but under certain circumstances foundations, associations, partnerships and foreign companies that are active in the Netherlands are also obliged to do so. Intercompany Solutions has extensive experience with advising on and drafting the corporate tax documents of all types of companies.
We prefer to know our clients well, in order to be able to provide you with tailor-made advice at all times. Our permanent team of tax specialists is always aware of what is going on, and can therefore anticipate (upcoming) changes in legislation and regulations. We are also involved with many corporations internationally, which means that we can provide international companies with solid advice regarding the tax legislation per country. We can unburden and execute corporate tax returns in all countries flawlessly. This way, you know exactly where your company stands.
What kind of advice on corporate tax do we offer?
Tax laws are considered highly complex, partly due to the many special facilities and anti-abuse provisions. Every country needs to safeguard itself against tax evasion by companies, hence the ample amount of tax-related provisions. In essence, it requires expert knowledge to work with these laws and regulations. For any Dutch company, it is important to have a good idea of all possible tax consequences in advance. We can take care of the entire yearly corporate income tax return for you. In addition, we can also provide specific services or advice regarding the subject. Examples of some of our services within this field are:
- Corporate income tax returns
- Optimizing the tax position of your company
- Corporate structuring
- Guidance on tax control
- International advice and transfer pricing
- Setting up and supporting foreign activities
- Advice regarding the best legal entity to choose
- Advising on converting a sole proprietorship to BV or vice versa
- Advising on tax planning
- Corporate takeovers
- Advising on investment deductions
- Applying for Research & Development deduction
Advice about tax reporting and periodical tax returns
When you pay taxes in a certain country, you will also be exposed to the obligation of reporting all the income your company generates to the national tax authorities. If you have income that comes from several countries, you should note that it is highly possible that you will have to file tax reports in multiple countries simultaneously. This means that it can be a difficult task for any international entrepreneur to sort out their financial situation, if this person has no knowledge about taxes whatsoever. In general, every business owner in the Netherlands is required to submit several digital tax returns on a yearly basis, such as the following:
- Annual corporate income tax return
- Annual regular income tax return
- Annual, monthly or quarterly VAT return
- Annual, half-yearly, monthly or every four weeks payroll taxes
- Excise duty
- Consumption tax
- Intra-community supplies
If and when you don’t file the necessary tax returns on time, you can expect to receive a warning at first. If you consistently don’t file tax returns or don’t pay taxes, you can expect consequences such as hefty fines and even jail time. So, always make sure your financial administration is correct and up-to-date, making it easier for you to meet all obligations. Intercompany Solutions can advise you about clarifying the scope of the reporting obligations, the classification thereof, complying with specific reporting obligations and assist you with building the required local and master files. Feel free to contact us with your inquiries about his subject.
How to file an income tax return from abroad?
When you own a Dutch business, there are many sources of information you should educate yourself about. One very important factor is the source of your profits. As the owner or director of a company, it is important to look at how the profit from your company is earned internationally, and where the profit is generated. For example, tax-attractive structures can ensure that the tax burden of your company can be significantly reduced, in terms of profit from your company, but also with regard to royalties and dividends. When your company has to deal with foreign tax rules, it is essential that you know all the relevant national and international laws and regulations, as well as treaties between countries. You should ask yourself some questions to know where you stand as a business, such as:
- Does your company have to deal with foreign tax rules?
- In how many countries is your company based?
- Is there a treaty between your country of origin and the country you own a business in?
- Are you opening a branch abroad or setting up a foreign company as a result of exports or international partnerships?
- Is your company part of an international structure and do you want to know what consequences new tax legislation has for your company?
A distinction must be made, and it must be determined, whether a company owner is liable to tax at home, or abroad. It is therefore useful to look at the taxing power of countries if you live in the Netherlands, but have a share in a company abroad or if you have a foreign nationality, live abroad and are therefore liable to tax abroad, but have a substantial interest in a Dutch company. The distinction you will need to make is the ability to either underride, override or half-ride new international treaty provisions. The implementation of any international treaty obligations is basically left to each individual country, as it deliberates internally under its main constitutional structure. Hence, there isn’t any guarantee that all involved states will fully implement the treaty obligations. Therefore, you will need to find out per country whether a certain treaty is implemented, half-implemented, or not implemented at all. This makes international taxation issues very tricky for entrepreneurs who have no financial and/or fiscal expertise, knowledge or background.
Do you live in a foreign country and do you also pay income tax in the Netherlands levied over (almost) your entire income? Then it is worthwhile to check if you are a qualifying foreign taxpayer. Do you meet these conditions? Then you are entitled to the same deductions, tax credits and tax-free capital as a resident of the Netherlands. Intercompany Solutions is happy to use our knowledge and international network to help you with your international tax issues. Our tax advisors keep a close eye on developments and new legislation within the field of international tax law. We can explain amended and new legislation in a clear way to you, whether this concerns Controlled Foreign Company (CFC) legislation or developments in the field of national and international corporate tax, dividend tax, transfer pricing and anti-abuse provisions. If you feel safe to be able to rely on an expert tax specialist for your international tax questions, then Intercompany Solutions is the partner for your company. We can help you with complying to certain mandatory international reporting obligations, such as:
Advice about corporate income tax compliance
When you set up a company anywhere in the world, you can expect to be obligated to comply to the current tax laws and legislation in any country. This obligation is also referred to as (corporate income) tax compliance. This is essentially a requirement in almost every country and jurisdiction worldwide. Most tax laws and rules are extensive and plentiful, plus they are often interconnected with international tax deductions and credits. The fact that these laws keep changing and being added, makes it complicated to stay up-to-date about the exact amounts you will need to pay as a businessowner. Intercompany Solutions has many years of extensive experience in handling the corporate tax compliance workload of various national and international companies. We can also assist you in meeting any reporting obligations and strict deadlines, so you don’t get into trouble with national or international tax authorities.
We combine our corporate expertise with knowledge of many thriving industries, whilst also adding flexibility to always be able to suit your company’s needs. This enables us to address a large variety of corporate tax compliance necessities and needs. We offer transparency by pairing different compliance services, including outsourcing options. This enables you to meet all tax related obligations efficiently. You can ask us any question you have about international tax compliance, which we will strive to answer to our best ability.
Several ways to measure corporate tax compliance
In essence, most companies and corporations adhere to the current tax regulations and thus, pay the correct amount of taxes. Nonetheless, there will always be businesses and corporations that try to evade tax laws for their own benefit. Therefore, the fines and punishments for tax evasion are hefty, and you should always be vigilant concerning this matter. Countries and their national tax authorities use a plethora of approaches to support their compliance engagement with corporations and large businesses, which also includes correcting and preventative actions. Once a company or corporation is flagged as concerning, that company will be monitored and assisted with existing compliance issues. Tax authorities generally tailor their engagement with corporations based on several factors that enable them to understand the company’s corporate affairs, such as:
- The size of the company
- The choices the company makes and the behavior it shows regarding tax laws
- The transparency of a company’s actions
- The amount and level of risk the company takes
- The possible relationship of the company or corporation with wealthy individuals, trusts and partnerships
Intercompany Solutions can effortlessly handle all corporate income tax compliance matters that your company is involved in. You can choose which services are a good fit for your business, based on your individual wants and needs. We offer a variety of services aimed at tax compliance, such as:
- Registration at the Dutch Tax Authorities
- Reviewing your financial statements
- Obtaining an extension for filing
- Filing all necessary tax returns
- Administrative tasks regarding the annual corporate income tax accrual
- Advice about tax filing and payment deadlines
- Tax reporting
- Corresponding with the Dutch Tax Authorities regarding outstanding corporate tax compliance issues for your company
- Dealing with objections and appeals, as well as assessments
- Creating supplementary reports
- Fiscal consolidations
- Supporting all tax returns with computations and schedules
- Calculating capital and tax allowances
- Obtaining certain credits and refunds
- Corporate tax compliance planning
- Management of your company’s effective tax rate
Advice about tax risk management, tax law and tax rulings
Next to managing your fiscal day-to-day responsibilities, it’s also very important to make a tax risk assessment and implement certain task risk management procedures for your company. This involves minimizing and even excluding task risks, but also keeping yourself informed about recent national and international law amendments and tax rulings. Minimizing task risks generally revolves around a solid tax compliance strategy, since this effectively eliminates tax risks in itself. But what happens, when you file a late tax return? Or you lose a part of your administration? Or if you pay the VAT, you owe the Dutch government too late? Such questions are answered beforehand when you implement a tax risk strategy, making it much easier for you to omit such risks in the first place.
Minimizing and excluding tax risks
The larger your company will be, the more time and effort you will have to put into preventing and minimizing tax (compliance) issues and risks. This is due to the fact, that larger profits inevitably also create larger sums that have to be paid to the involved tax authorities. Large companies also have a name to uphold. The reputational risk for these companies is high. The best way to avoid any problems is to consult with the tax authorities on time about any issue that might have arisen. Minimizing tax risks logically also causes less stress for entrepreneurs, making it easier for you to focus on business goals instead. Excluding tax risks is only possible in cases where there is enough money to be paid upfront, so for starting entrepreneurs this is more challenging. 100% exclusion is very rarely possible. Rules can be interpreted differently, and this can create miscommunication and faulty conclusions. Intercompany Solutions is happy to look with you at how you can minimize your corporate tax risks. Our experts are able to provide you with solid and thorough advice, so you don't have to lie awake at night from stress. We ensure that your financial situation is monitored and managed correctly.
Since we are a team of experienced legal and tax professionals, we can offer you advice regarding the current scope and/or level of any tax risks your company might be vulnerable to, as well as possible solutions to mitigate such risks. In Holland, it is actually quite realistically possible to obtain a large level of certainty regarding taxation matters in advance. For example, you can opt to obtain certainty in advance concerning your tax position in a transaction your company has started or anticipates. Or you can mitigate risks by filing a 100% correct tax return. Intercompany Solutions has many years of experience in negotiating with the Dutch Tax Authorities, making it easier for you to hold a firm position with your business within your specific niche. In a lot of cases, we see that the tax inspector sometimes misinterprets relevant facts and applicable circumstances. In general, you as a company owner are responsible for providing the tax authorities all necessary information. If you don’t do this, or don’t deliver all the relevant information, this can result in the tax inspector having a lack of information.
This can result in fines that are unjust, hence the importance of having a partner who can easily communicate with such organizations for you. Intercompany Solutions can help you avoid messy situations that sometimes even end up in court. When you outsource your financial activities to us, we make sure that you are properly represented in a professional and neutral way. This ensures that your tax position is respected and the situation stays under control at all times. Feel free to contact us for more information regarding your specific request.
Some well-known tax risks explained
There are a few standard issues that might arise, which can get your business into trouble if you don’t handle these problems efficiently and correctly. The most well-known risk is, of course, a late tax return or payment. Especially with payroll taxes and sales tax (VAT) this occurs regularly. For these taxes, all returns and payment must be made exactly on time. If you cannot manage to do this, fines immediately come into play. If you forget to file or pay once by accident, that's not a big deal. If this happens more often, though, fines will be imposed and if you do not pay these consistently, there is a good chance that the tax authorities will actively seek contact. This is done by ways of reminders and subpoenas. In the case of corporate income tax, this is slightly less important. In that case, you first file a declaration, after which the assessment is imposed. That is the only moment the tax can and must be paid. Fines follow here less regularly, due to it being an annual process and does not return every month. It is useful to check carefully within the company how all tax processes work. Who is responsible for the calculations, declarations and payments? Where do the blue envelopes from the tax authorities come in? If these processes are clear, it saves you a lot of extra work and research.
Another well-known risk is having a complex business structure. Many holdings have a complex structure of underlying companies, sometimes with branch offices in multiple countries. This often leads to complications for taxes, such as the question which legal entity you choose and what kind of consequences this will have for your tax return. When you establish a holding structure with multiple underlying private limited companies (Dutch BV), you need to take into account that you will have extra payroll tax returns, VAT tax returns and corporate income tax returns for each separate BV. Essentially, this means: more rules to keep an eye on. Therefore, see if the structure could be as simple as possible. It’s always best to focus on the future costs to maintain the structure.
A third risk entails VAT on cross-border supplies of goods and services. As soon as goods or services cross a national border, you as a company must take into account other requirements and a different rate than the current 21% Dutch VAT. These requirements can also differ per delivery, for example when VAT is shifted, 0 percent VAT for an ICP delivery or export and simplified ABC-deliveries (which include 3 or more companies in different nations). In addition, these requirements may vary per delivery and/or country and/or supplier. In the case of cross-border supplies, every entrepreneur must prove that the goods have actually crossed the border. And regularly that is not the case. Another common mistake, is that an invoice has the wrong VAT number, which means that an ICP supply to the supplier does not match the ICP supply that the customer indicates. Such circumstances should also be looked at carefully with incoming invoices, sincethings regularly go wrong. That is why an inventory of all goods and services flows with foreign parties, or with goods that actually go abroad or originate from abroad, is absolutely necessary. So make sure you set up an up-to-date IT system, that always shows the exact amount of goods available and in transit. This match between actual goods flows and IT systems also creates insight into possible carousel fraud – which can also affect a party that is in good faith. If you need any help with such issues, feel free to contact Intercompany Solutions for help and advice.
Advice about due diligence
Another important factor, when buying or investing in a company, is a due diligence investigation. During a due diligence investigation, a company or an individual is carefully analyzed for economic, legal, tax and financial circumstances. This includes, for example, turnover figures, company structure, and also possible relationships with economic crime, such as tax fraud and corruption. Such an investigation is necessary as soon as a company maintains relationships with business partners, or when another company needs to be acquired. A definition of business partner is: "anyone who maintains business contact with a company and is not an employee or body of it". It doesn’t matter what the size or significance of the business relationship is, this includes suppliers, customers, sales representatives, subcontractors, partners and advisors in joint ventures, as well as intermediaries and small-scale service providers. By carrying out due diligence research, organizations are able to map out all possible risks and opportunities regarding a certain transaction or goal. This way you avoid negative surprises. Which form of due diligence is applied, depends on the situation in question and the extent of the risks.
The purpose of a solid due diligence investigation
Due diligence investigations are carried out for a wide variety of purposes. One of the main reasons to start a due diligence process, is when a company wants to buy another company. For the buyer, the first purpose of a due diligence investigation is to find out more about the company to be purchased. The buyer will try to determine whether the company is worth the purchase price, and what risks are associated with the proposed acquisition of the company. Next to that, a buyer has an obligation to investigate. This duty of investigation is opposed to the seller's duty of notification. Although the obligation to notify in principle precedes the duty of investigation, the buyer may still fail in his duty of investigation if he does not carry out sufficient research. In that case, he runs the risk, among other things, that he cannot recover any damage from the seller. So, we always strongly advise performing due diligence, to limit your own risks as much as possible. It’s always better to be safe than sorry!
This will ensure that the buyer doesn’t blindly rely on the seller's communications, and will therefore choose to investigate all matters that are (or seem) important at first glance. On the other hand, if the buyer receives certain information during the due diligence investigation, but does not notice the risks, this can affect his legal position later on. The examination should therefore be carried out in a professional manner. In general, we advise entrepreneurs to seek out specialized third parties to assist them with a due diligence investigation. This will exclude all risks, since a professional knows exactly where to look for possible future risks.
In addition to the abovementioned, there are regularly matters that are of particular interest to the buyer, but of which the seller does not always have to assume the interest. This means, that the seller might fail communicating these matters. It is therefore important that the buyer asks the right questions during the investigation, and also knows how to ask the right questions. This accentuates the importance that the buyer attaches to certain characteristics of the company she or he wants to buy. How extensive a due diligence investigation should be, will often depend on the type of company being purchased, the size of both companies, the niche of both companies, the geographical location of the companies and the financial importance of the transaction. An investigation usually involves at least legal, financial, tax and commercial aspects of a company.
Special points of interest to focus on during a due diligence investigation
When you start a due diligence process, you need to take into account that you will need access to a large and varied set of resources, and not all of these resources are free online resources. This makes due diligence a rather complex activity. For a thorough analysis, there are several special sources you will need to consult, some of which we will explain below in more detail.
Watch- and blacklists
In a due diligence investigation you should definitely screen against relevant lists from Interpol, The U.S. Federal Bureau of Investigation (FBI) and national and regional search lists of the country where the company or individual is located, such as the Dutch AIVD. These lists contain the names of persons who are related to international crimes or terrorism.
Crime-related lists contain information about the individuals who are characterized as being at risk, which includes convicted criminals and names from organized crime. Examples of these lists are the 'FBI Most Wanted Terrorists' and 'Interpol Most Wanted'. If you want to make sure you are getting into business with ‘clean’ individuals, looking up such lists is a must.
Politically Exposed Persons
The reason you should look this up, is due to the fact that politically exposed persons can be assumed to be at a higher risk of being exposed to criminal activities such as bribery, money laundering, corruption, or other (economic and fiscal) offenses. This is because of their influential position, whether in government or in another large corporation or organization. Note that a distinction is made between international and national politically exposed persons (such as heads of government, prominent politicians and top soldiers), and persons who hold or have held an important position in an international organization (directors, top managers) and their direct subordinates. If a potential client or business partner is identified as a politically exposed person, you need to ensure effective risk management through an extensive due diligence process.
Sanctions lists include countries, entities and individuals against whom national or international sanctions have been taken, for example through conflict, terrorism, human rights violations and other serious violations. This means, that these countries or entities are violating international law agreements. These sanctions may result from various sources, such as United Nations Security Council resolutions, decisions of other international cooperation bodies and regulations of national governments. Examples of sanctions are: trade embargoes, arms embargoes, freezing of bank balances, entry bans, and the limiting of diplomatic or military relations. Important sanctions lists include those of the United Nations, the European Union, the US Office of Foreign Assets Control (OFAC) and the UK Treasury.
Other data sources that might be of importance
Next to the lists mentioned above, there are also other sources you can view. One example is an overview of legal proceedings. In overviews of legal proceedings, you will find information about lawsuits in which the legal or natural person concerned may have been involved. This can tell you a lot about their intentions, and how they have behaved in the past. You can also consult recent news items, since current and archived news items can play a useful role in checking the reputation or official status of natural and legal persons. You should, however, consider news stories as complementary to the "traditional" sources for due diligence research. Last but not least: you should always consult their company profile. This contains information about the formal establishment of the company in question, the company structure, the ownership relationships and its control mechanisms. In the Netherlands, you can look this up via the Dutch Chamber of Commerce (Kamer van Koophandel).
Intercompany Solutions can assist you with conducting a due diligence whenever you need more information about another company or person. Do you want to acquire a company, or merge with a company? Or are you curious about a potential future business partner, but not yet sure whether their company profile fits your expectations? We have a team of experts who can carry out the investigation for you, including various fields related to taxation and their behavior during the past years. Our research is then specifically tailored to your needs, i.e. we translate the outcome of the due diligence investigation into readable material that tells you all you need to know in the form of an effective risk analysis. You can then proceed with your plans safely, by mitigating certain risks via an effective risk strategy. Please contact us for more information about the topic, we will gladly show you the way.
Advice about transfer pricing
Transfer pricing is an interesting topic when you do business internationally. If you, as a company of sufficient size, are active in different countries, you are obliged to work with transfer pricing. These are market-based amounts based on business principles. In essence, all existing companies strive to arrange tax matters as favorably as possible. Internationally operating companies can take advantage of the differences in tax rates between countries, by exchanging goods and services internally. But this exchange of products and services within an internationally operating group eventually has consequences for the tax that has to be paid in the various countries you operate in. In order to ensure that this exchange takes place in a manner acceptable to all parties, the tax authorities apply so-called transfer pricing. By means of transfer prices, market-based amounts are agreed for the goods and services exchanged within such a company.
Making transfer pricing agreements in advance
When you own a company that has multiple branches in different countries, then your internal services and supplies also switch between these destinations. In such cases, you can make agreements with the national tax authorities in the different countries regarding the remuneration of these. This is preferably done in advance, so you know what your obligations are as a business owner. Such an agreement is called an Advance Pricing Agreement (APA). In doing so, you as a company have to submit documentation on the determination of the transfer price, and also about how it was determined exactly. This way, the national tax authorities can check whether the transfer price is in line with the market and whether all the conditions are met.
How to set a transfer price for your company?
When you try to set a transfer price, you need to know that this contains much more work than, for example, finding a comparable price between parties or setting a surcharge. In order to set up a reasonable transfer price, it is essential to follow some basic steps during the process. The final price is actually less important, than the way you decide about this price. We will outline these steps below.
1. Obtain knowledge about your transactions
The first thing you will need to do, is gain knowledge about your affiliate transactions. An affiliate transaction is basically a transaction between parties, that are part of the same group. If you work directly with the company that is involved in the affiliate transactions, you should be able to look up this kind of information quickly. Often, entrepreneurs already know this information from experience. Therefore, this first step should not take you too much time and effort. Nonetheless, it is very important. To be able to assess whether a potentially similar transaction is indeed comparable enough, you need to have a good idea of the affiliate transactions.
2. A functional analysis of transactions
Once you have gained sufficient knowledge about your transactions, you should carry out a functional analysis. This is a query that identifies the functions, assets and liabilities relevant to the related transaction(s). Then, you assess which of the parties involved in the transaction performs which functions, who runs which risks and who owns which asset. This is highly important, since it shows you who exactly is responsible for what. The distribution of functions performed, assets used and risks incurred should be comparable to the division of functions in a potentially similar transaction.
3. Selecting the method of transfer pricing
Once you have completed the functional analysis as well, you should choose an appropriate transfer pricing method. When you start looking this up, you should focus on the best fitting method for your company and its goals. In doing so, you take into account the strengths and weaknesses of each transfer pricing method. So, this is generally a comparison of all potential options. You can read more about the different transfer pricing methods on this page.
4. Determine the correct transfer price
Once you have gained knowledge about the affiliated transaction, performed a functional analysis and selected a fitting transfer pricing method, then you can finally look for transactions that are comparable to your company’s transactions. Thus, you will also be able to set a proper transfer price that matches your preferences. The transfer pricing method you chose greatly influences the way you can look for similar transactions. For example, if you chose the comparable uncontrolled price method (CUP), you essentially search for similar transactions carried out by other independent parties. Then, you can apply the same price to your affiliated transaction.
However, when you are using the transactional net margin method (TNMM), the transfer price is determined indirectly. This is one of the most popular methods. This involves a benchmark study, which will make it possible for you to determine the so-called EBIT margin other independent companies use in comparable transactions. The EBIT margin can be described as a financial ratio, that can measure the profitability of any company. This is calculated without taking the effect of rates and interest into account. EBIT stands for earnings before interest and taxes, so the calculation takes place by dividing this by the total sales or net income of the company. The EBIT margin is also called the operating margin, since it shows the profits or benefits generated by any company’s economic activity alone. It is characterized by it ignorance regarding the way a company is financed, for example, or the possible intervention of the state. In any case; whichever method you choose, at this point you should be able to come up with reasonable and fair transfer prices.
Intercompany Solutions can provide you with qualified and expert advice regarding the correct transfer prices for your company. We can provide you with tips and tricks regarding applicable national and international transfer pricing rules, as well as management of all the transfer pricing documentation requirements. Contact us for more in-depth information, or a clear quote.
Looking for representation for your business in legal tax matters?
When you deal with international tax matters, we strongly advise you to seek specialized representation. When you let someone represent you in certain matters, this partner generally also takes care of all necessary contacts on your behalf, such as the Dutch Tax Authorities. This makes it easier for you to deal with daily business activities, as Intercompany Solutions can handle all financial and fiscal responsibilities. In addition, in most cases you will have to authorize a representative by issuing a written statement that clearly states this. In it, you give your authorized representative permission to act for you at the Tax And Customs Administration. This is also possible for 1 specific case, for example an objection, or for certain declarations. Intercompany Solutions can analyze your company’s financial and fiscal position, by carrying out an investigation. With the results of this investigation, we can assist you with creating an efficient tax strategy, as well as a risk management strategy. If you encounter any stand-alone fiscal issues, we can also help you with finding the most effective and appropriate solution. We can also advise you about tax compliance services, which include your administration and payroll duties. We always strove to come up with solutions that match your business objectives and future goals. If you are worried about the level of compliance of your company, then we can make sure that you stay compliant with both Dutch and international fiscal laws and regulations. We can also enter into negotiations on your behalf, for example with the tax authorities in any given country. We can assist you with a tax audit, negotiate with the tax inspector, or assist with tax mediation. Keeping a good relationship with tax inspectors can be tricky, due to the large amount of conflicting laws and regulations. In some cases, endless discussions can easily escalate into a long-term conflict. Our knowledge of tax regulations and our experience with dealing with the Dutch Tax Authorities and tax inspectors, helps us to avoid unnecessary conflicts and court procedures. You can contact us anytime for proper representation, or simply more information on a matter your business is