Section 29b of the Dutch Corporate Income Tax Act (Wet op de Vennootschapsbelasting 1969) relates to transfer pricing documentation requirements in the Netherlands. Specifically, it is part of the legislation that implements Country-by-Country (CbC) reporting, Master File, and Local File requirements for multinational enterprises (MNEs).Key points about Section 29b include:

1. It applies to MNE groups with consolidated group revenue of at least €750 million in the fiscal year immediately preceding the reporting year.
2. The legislation is in line with the OECD model legislation for CbC reporting and the EU Directive 2016/881 (DAC4).
3. Qualifying taxpayers must file the CbC report within one year after the closing of the fiscal year covered in the report.
4. For MNE groups with consolidated group revenue of at least €50 million in the fiscal year immediately preceding the reporting year, a Master File and Local File must be prepared.
5. The documentation may be prepared in English or Dutch.
6. While there is no requirement to file the Master File and Local File, the documentation must be available at the time the taxpayer is required to file its tax return for the same year.

These requirements are part of the broader transfer pricing documentation obligations in the Netherlands, which aim to ensure transparency and compliance with the arm’s length principle in international transactions between related parties.

Country by Country Reporting law

Section 29b of the Dutch Corporate Income Tax Act (Wet op de Vennootschapsbelasting 1969) is directly related to Country-by-Country (CbC) reporting requirements in the Netherlands. This legislation implements CbC reporting for multinational enterprises (MNEs) as part of the broader transfer pricing documentation obligations.Key aspects of the relationship between Section 29b and CbC reporting include:

1. Threshold: CbC reporting requirements apply to MNE groups with consolidated group revenue of at least €750 million in the fiscal year immediately preceding the reporting year.
2. Alignment with international standards: The Dutch legislation on CbC reporting is in line with the OECD model legislation and EU Directive 2016/881 (DAC4).
3. Filing deadline: Qualifying taxpayers must file the CbC report within one year after the closing of the fiscal year covered in the report.
4. Reporting entities: The legislation distinguishes between Ultimate Parent Entities (UPEs), Surrogate Parent Entities (SPEs), and other entities within the MNE group. UPEs and SPEs are required to prepare and submit a CbC report, while other entities must submit a CbC notification (CbCN).
5. Content requirements: The CbC report must include an overview of income allocation, taxes, and business activities by tax jurisdiction, following the requirements outlined in Annex III to Chapter V of the OECD Transfer Pricing Guidelines.
6. Language: The CbC report may be prepared in either English or Dutch.

This legislation is part of a broader set of transfer pricing documentation requirements in the Netherlands, which also includes Master File and Local File obligations for MNE groups with consolidated group revenue of at least €50 million. These requirements aim to enhance transparency and ensure compliance with the arm’s length principle in international transactions between related parties.

Country-by-Country (CbC) reporting differs from the Local File and Master File requirements under Section 29b of the Dutch Corporate Income Tax Act in several key ways:

1. Scope and purpose:

• CbC reporting provides a high-level overview of the global allocation of income, taxes paid, and economic activities of multinational enterprise (MNE) groups.
• The Master File offers a general overview of the MNE group’s business, including transfer pricing practices.
• The Local File contains detailed information on specific intercompany transactions relevant to the local entity.

2. Threshold for application:

• CbC reporting applies to MNE groups with annual consolidated group revenue of €750 million or more.
• Master File and Local File requirements typically apply to MNE groups with lower revenue thresholds, often €50 million or more.

3. Filing requirements:

• CbC reports are typically filed by the Ultimate Parent Entity (UPE) or Surrogate Parent Entity (SPE) with their local tax authority.
• Master File and Local File are generally prepared and maintained by local entities but may not need to be filed unless requested.

4. Information detail:

• CbC reports contain aggregated financial and operational data by tax jurisdiction.
• Master File provides high-level information on the MNE group’s global business operations.
• Local File focuses on specific transactions of the local taxpayer and transfer pricing analyses.

5. Risk assessment use:

• CbC reports are primarily used for high-level transfer pricing risk assessment by tax authorities.
• Master File and Local File are used for more detailed transfer pricing analysis and compliance checks.

These differences reflect the complementary nature of the three-tiered approach to transfer pricing documentation, with each component serving a specific purpose in enhancing transparency and compliance for MNEs.