NL Tax Alert: TP Mismatch Decree published
Yesterday, the Dutch Ministry published a decree to narrow the scope of the 2022 TP mismatch rule “article 8bd”.
Under article 8bd, the tax basis of an asset acquired by a Dutch taxpayer is limited to the value that is recognized for tax purposes at the transferor. In practice, it was uncertain how the rule works out in case a Dutch taxpayer acquires an asset via a contribution or distribution from a non-taxable entity. The Decree clarifies that article 8bd is not meant to apply to acquisitions from an exempt entity or an entity resident in a country that does not levy tax. In these situations, the taxpayer may recognize the fair market value as tax basis, provided that the legal documentation and annual accounts show the fair market value of the transferred asset.
The decree provides welcome clarification for exempt entities and entities not subject to tax, but does not contain any guidance for asset acquisitions from (reverse) hybrid entities.