1) Has the Netherlands implemented any BEPS recommendations? If so, which Action Items?
Regarding BEPS Action Items 2, 3 and 4, the Dutch government believes that only multilateral initiatives can address these issues effectively. In this respect, the Netherlands has no plans to tighten regulations unilaterally in these areas.
The Netherlands has already updated its legislation or international policy regarding Action Items 6, 7, 13 and 14, or has plans to update these Action Items. The Netherlands has started exchanging rulings with other tax authorities, beginning 2016. The Dutch innovation box regime will be adjusted on January 1, 2017, as a result of Action Item 5. Additional transfer pricing documentation legislation was introduced on January 1, 2016.
2) What is the Dutch expected timeline for implementing country-by-country reporting?
On September 15, 2015, the Dutch State Secretary of Finance released a new law containing modifications to the Dutch Corporate Income Tax Act 1969. The new legislation includes additional (mandatory) transfer pricing documentation requirements in line with the three-tiered approach of Action Item 13, including country-by-country reporting.
On December 22, 2015, the Dutch Senate approved a new law detailing transfer pricing documentation requirements. It is effective as of January 1, 2016.
3) If the Netherlands has already implemented CbC, what has been the reaction from taxpayers?
In June and December of 2015, BDO provided a large seminar for clients and potential clients regarding the BEPS project and the changing tax environment. The seminar was well attended, indicating that the BEPS project and future changes in legislation are important to our clients. In this respect, most of clients are well aware and/or interested in the proposed changes, and would like to know how they should respond to this new tax environment.
4) What measures are multinationals in the Netherlands taking to prepare for country-by-country reporting?
From our experience, multinationals have taken various measures to prepare for country-by-country reporting. Some of our clients take immediate measures to prepare country-by-country reporting, such as a dry run, and make sure they are compliant with the new tax regulations. Other multinationals have not taken measures yet to prepare for country-by-country reporting, as they have the impression they have more time to prepare and execute the actual tax framework. Overall, it seems that most taxpayers are taking measures, or plan to take measures, to address country-by-country reporting.
5) If the Netherlands has already implemented CbC, what challenges are taxpayers facing or anticipated to face?
The new country-by-country reporting law takes effect from January 1, 2016. The law requires a master file and local file to be submitted by Dutch entities that are part of a multinational group with a consolidated turnover exceeding the €50 million. The country-by-country reporting requirements apply to Dutch tax resident entities that are members of a multinational group with a minimum consolidated group turnover of €750 million. The multinational group is obliged to provide a country-by-country report within one year after the end of the reporting financial year to the tax authorities where the ultimate head of the group is located. Under certain circumstances, such as gross negligence, non-compliance with the country-by-country report filing requirement could result in an administrative fine. In addition, in case of non-compliance with any of the new transfer pricing documentation requirements, criminal sanctions may be imposed.
The challenges they may face are reporting issues (i.e., different IT systems) and implementation guidance.
6) Are the Dutch taxing authorities taking any measures to prepare for any changes brought about by BEPS (e.g., changes in staffing, increases in budgets)?
The Dutch tax authorities have a team focusing on transfer pricing-related issues. The Dutch tax authorities also intend to form a new team that will predominately focus on country-by-country reporting. The Dutch tax authorities are looking to hire approximately 20 full time employees for this team.
7) How will country-by-country reporting affect how you provide services to your clients?
Historically, BDO Netherlands has a strong focus on small and medium sized clients/companies. Thus, BDO Netherlands does not have many clients reporting turnover exceeding €750 million.