Netherlands: Transfer pricing documentation for taxpayer’s intercompany credit facilities found deficient (Court of Appeal decision)
The court addressed several transfer pricing issues, including creditworthiness, comparability adjustments, arm’s-length ranges, and consideration of total financing costs.
September 25, 2026
The Dutch Court of Appeal held that the transfer pricing documentation for several of the taxpayer’s intercompany credit facilities contained significant deficiencies, and thus the burden of proof was shifted to the taxpayer to prove it was entitled to deductions for interest on drawn amounts and for commitment fees calculated by reference to the facility amounts.
In evaluating the taxpayer’s transfer pricing documentation and its entitlement to the disputed deductions, the court found that:
- Taxpayers need to perform a robust, borrower-specific creditworthiness analysis that addresses factors such as explicit guarantees, implicit group support, and the borrower’s financial and operational profile.
- Adjustments to comparables must be supported by sufficiently reliable information, which in this case did not include the taxpayer’s rejected liquidity and regression-based adjustments.
- If there is a small set of highly reliable comparables, the tax authority may not automatically correct to the median when the upper end of the full arm’s-length range still represents an acceptable arm’s-length outcome. Thus, in certain cases a single highly reliable comparable may be used to support an arm’s-length price.
- A total-cost approach that considers interest and relevant commitment fees together may be acceptable.
- Contemporaneously prepared transfer pricing documentation is given greater weight in determining whether the taxpayer intentionally filed an incorrect tax return.
Read a September 2026 report prepared by the KPMG member firm in the Netherlands