Netherlands: “Country-by-country” reporting, documentation proposed for 2016

Netherlands: CbC reporting, documentation proposed

The Dutch government on 15 September 2015 presented its main plans for the year ahead during the annual “Prince’s Day” (budget day). Included in the proposals is a new section to be added to the Dutch corporate income tax law for additional transfer pricing documentation requirements—i.e., country-by-country (CbC) reporting and documentation requirements, essentially incorporating the OECD’s base erosion and profit shifting (BEPS) Action 13.


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In addition, the Netherlands would add more stringent documentation requirements for multinational enterprises (MNEs) that have annual consolidated group turnover greater than €50 million. The proposed changes are expected to be enacted and effective beginning 1 January 2016.

The proposed CbC requirements would be a change from the current legal requirements under article 8b of the Dutch corporate income tax law (known in English as the “Corporate Income Tax Act 1969”).  Not only would the proposed legislation provide more detail on the documentation required as such, but it also would introduce a penalty regarding CbC reporting and a strict filing deadline for documentation. 

Country-by-country reporting

A key objective of the BEPS Action 13 is to increase transparency through improved transfer pricing documentation standards, including through the use of CbC reporting. As such, CbC reporting requires multinational enterprises (MNEs) to provide tax administrations information annually, in each jurisdiction where the MNEs do business, relating to the global allocation of income and taxes paid, together with other indicators of the location of economic activity within the MNE group.

According to the current wording of the proposed law in the Netherlands, as from 1 January 2016, parent companies of Netherlands based multinationals with an annual turnover of a minimum of €750 million would be required to file the new CbC report within 12 months following fiscal year-end close. The first CbC reports would be filed in 2017, and could be filed in either English or Dutch language.

Follows OECD guidelines

The proposed law generally is in line with the CbC reporting implementation package, issued by the OECD in June 2015. This requires taxpayers to disclose per country information on revenues, profit before income tax, corporate income tax paid, corporate income tax as included in the annual accounts, stated capital, accumulated earnings, number of employees, and tangible assets other than cash and cash equivalents. 

Also, the Dutch proposal would require the following information to be provided for all the constituent entities of the MNE group: 

  • Constituent entities resident in the tax jurisdiction
  • Tax jurisdiction of organization or incorporation if different from tax jurisdiction of residence
  • Main business activity(ies)

Additional guidance is expected, concerning the form and content of the CbC report. 

Automatic exchange of reports

BEPS Action 13 proposes the automatic exchange of the CbC reports filed in the jurisdiction of the (surrogate) parent with the tax authorities of all jurisdictions in which the MNE operates. In line with the recommendations in BEPS Action 13, the proposed Dutch law would require constituent entities in the Netherlands to file the CbC report for the entire MNE group if the CbC report were not to be exchanged with the Netherlands by the country of the (surrogate) parent.  

Penalties would be imposed in instances of intentional non-compliance or “serious misconduct” of the reporting entity regarding its obligation to file the CbC report, with the penalty amount being up to €20,025 as well as possible criminal prosecution. 

More stringent Dutch documentation requirements

In addition to the introduction of CbC reporting, the Dutch government announced more stringent documentation requirements for MNE group entities that are tax resident in the Netherlands and have a turnover exceeding an annual threshold of €50 million. The group entity would be required to file a master file that provides an overview of the MNE as a whole, including the nature of its activities, its general transfer pricing policy, and its global allocation of income and economic activities. 

A local file would also need to be provided and reflect information relevant for transfer pricing analysis relating to transactions between taxpayers and related parties in other tax jurisdictions. Both files would be filed in either English or Dutch. 

The current wording of the proposed Dutch law is in line with the master file and local file standards, as described in the BEPS Action 13 report, but with additional guidance regarding the form and content of the documentation. An important and new requirement would be that the master file and the local file would need to be part of the entity’s administration prior to filing the tax return. This would be a change from current practice which requires the taxpayer to provide transfer pricing documentation within two months after a formal request has been issued by the Dutch tax administration.

An important and new requirement would be that the master file and the local file would need to be part of the entity’s administration prior to filing the tax return. This would be a change from current practice that requires the taxpayer to provide transfer pricing documentation within two months after a formal request has been issued by the Dutch tax administration. As before, noncompliance with the documentation requirements would result in a reversal of the burden of proof.

KPMG observation

Entities that form part of an MNE group and have a turnover exceeding the €50 million threshold need to consider preparing for the upcoming changes in the documentation requirements. Furthermore, MNEs with a turnover exceeding €750 million need to be ready to file CbC reports. To assist multinationals in preparing to comply with the proposed CbC reporting and documentation requirements, the KPMG member firm in the Netherlands (Meijburg & Co) has developed a process and diagnostic review.


Read a September 2015 report [PDF 36 KB] prepared by the KPMG member firm in the Netherlands.


For more information, contact a tax professional with the KPMG member firm in the Netherlands:

Jeroen Dijkman | +31-88 909 2543 |

Jaap Reyneveld | +31-88 909 1114 |

Eduard Sporken | +31-88 909 1618 |

Maurits Stuyt | +31-88 909 1061 |

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