AKD has submitted a response to the consultation legislative proposal Measures against Mismatches of Application at Arm's Length Principle (‘Wet tegengaan mismatches bij toepassing zakelijkheidsbeginsel’; the “Bill”).
The Bill breaks away from various long-standing taxation principles widely shared and accepted by the Dutch Supreme Court, such as the at arm's length and the matching principle. It has been these principles that convert (international) transactions between affiliated companies that are not at arm’s length into transactions that are at arm's-length for Dutch tax purposes. In that light, AKD's experts find no legal arguments to support the proposed changes. The sole reason to propose these changes appears to be the political aim of eliminating international mismatches, even though the cause of such mismatches can be traced to other countries (i.e. being the ignoring, or the inconsistent application, of the internationally accepted and widely shared at arm's length principle).
Other points addressed by AKD in this response are the retroactive effect of the proposed Bill, the potential conflicts with tax treaties and EU law, and potentially unforeseen concurrence with other regulations.
Consequently, AKD recommends against introducing the Bill at all or in any event against introducing it in the wording as proposed.
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