Transfer Pricing Certainty for Expats and International Entrepreneurs

If you’re an expat doing business in the Netherlands, navigating international tax rules can be challenging—especially when your company is involved in cross-border transactions within a group structure. A Dutch Advance Pricing Agreement (APA) offers peace of mind by giving you clarity in advance on how your transfer pricing arrangements will be treated for tax purposes.

APAs are formal agreements with the Dutch tax authorities that determine the arm’s length pricing of goods, services, loans, or royalties between related companies. This makes it easier to avoid double taxation and tax disputes with other countries.

Why Consider an APA?

Whether you’re operating a business, managing a group structure, or providing services internationally, an APA can:

• Eliminate uncertainty around your transfer pricing policy;
• Protect you from future tax audits or disputes;
• Help ensure compliance with Dutch and international tax rules.

How Does an APA Work?

The APA system in the Netherlands is aligned with the OECD Transfer Pricing Guidelines, which ensures consistency with global standards. An APA can be:

• Unilateral (with the Netherlands only),
• Bilateral (also involving the tax authorities of another country), or
• Multilateral (for more complex international structures).

APAs are usually valid for four years, and may even be applied retroactively in some cases.

Who Can Apply?

APAs are typically relevant for expats and business owners who:

• Run Dutch holding, financing, or licensing companies,
• Operate a branch or subsidiary of a foreign group,
• Have intragroup service, finance, or IP arrangements.

In particular, financial services companies (such as those offering back-to-back loans or licensing arrangements) must meet extra requirements relating to economic substance and real risk-bearing.

Minimum Substance Requirements

To qualify for an APA, the Dutch company must have sufficient economic substance in the Netherlands. That generally means:

• At least half the directors live in the Netherlands;
• Directors are qualified to carry out their duties;
• Key decisions are made in the Netherlands;
• The company’s bank account and bookkeeping are handled locally;
• The company has enough equity to assume business risk.

Risk Capital Requirements

If your company is involved in financing or licensing activities within a group, it must also bear actual economic risk. For example:

• A financing company must have equity equal to 1% of its loan portfolio, or at least €2 million;
• A licensing company must have equity equal to 50% of its royalty income, or at least €2 million.

Failing to meet these standards means:

• You may lose access to treaty benefits, such as relief from withholding tax;
• Income like interest or royalties may not be taxed in the Netherlands, because your company is treated as a service provider only.

How Nexpat Can Help

At Nexpat, we help expats and international businesses apply for APAs that fit their group structure and operations. We guide you through the entire process—from strategy and pre-filing to drafting the agreement and communicating with the tax authorities.

Want certainty on your transfer pricing?
Let’s talk about how an APA could support your business in the Netherlands.