Restriction of arm’s length principle application in corporate income tax (vpb)

This information is provided by

Netherlands Enterprise Agency, RVO

Effective date: 1 January 2022

What changes?

Do you have an international company? You will no longer receive a tax benefit on the basis of the arm’s length principle on your corporate tax return (vennootschapsbelasting, vpb). The legislative proposal will limit differences in transfer pricing, which result from varying applications of the arm’s length principle.

Intra-group business should be conducted on the same basis as between independent parties. This is the arm's length principle. If another country does not apply this principle, there may be mismatches in international situations. As a result companies may pay too little taxes.

As of 1 January 2022 such mismatches will be counteracted with new legal measures. Profit in the Netherlands can no longer be reduced if the other party does not apply commercial pricing that is included in the corporate income tax.

For whom?

  • international companies (multinationals)

When?

This change in law enters into effect on 1 January 2022.

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This information is provided by

Netherlands Enterprise Agency, RVO