5 Thoughts on a Dutch transfer pricing court case involving a business restructuring
On September 30, 2022, the North Holland Court ("the Court") ruled on a dispute involving the delineation and valuation of a business restructuring for tax purposes. The business restructuring entailed the intercompany reallocation of certain functions of a Dutch company to a Swiss sister company as part of a larger group-reorganization. The taxpayer argued that the transfer was limited to certain assets, resulting in an exit tax valued at EUR 2 million. The Dutch tax authorities (“DTA”) took the view that substantial and core company activities and responsibilities had been transferred from the Netherlands to Switzerland, along with the associated profit potential. The initial assessment of the arm’s length transfer price by the tax authorities was EUR 320 million. The Court appointed an independent expert assigned a minimum value of EUR 85 million to the profit potential transferred. The Court adhered to this valuation.
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