Key features of the final report
The report ‘Transfer Pricing Documentation and Country-by-Country Reporting’ regarding Action 13 (‘report’) contains the wording for the new Chapter V of the OECD Transfer Pricing Guidelines on Documentation, covering the objectives of the documentation requirements, the new three-tiered approach, compliance and implementation issues. The annexes to the new chapter outline the information that should be included as part of the different documentation files.

Three-tiered documentation approach
The OECD introduces a three-tiered documentation approach:

  • Master File to provide an overview of the MNE group business, overall transfer pricing policies and the global allocation of income and economic activity of the MNE.
  • Local File supplements the Master File and focuses on material transactions between the local country affiliate and associated entities in different countries.
  • CbC Report template including certain tax, finance and substance information on a country by country basis.

Taken together this standardized approach to transfer pricing documentation will require taxpayers to articulate consistent transfer pricing positions. The CbC Report is intended to provide tax administrations with relevant information to perform an efficient and robust transfer pricing risk assessment. The CbC Reporting is subject to a EUR 750 million threshold, which a MNE needs to exceed in terms of consolidated turnover. The implementation of (and thresholds, if any, for) the master and local transfer pricing files are left at the discretion of the individual jurisdictions.


  • The model – local – legislation is to be used by countries to require the ultimate parent entity of an MNE group to file the CbC Report in its jurisdiction of residence.
  • The model legislation provides for backup filing requirements: a) when the jurisdiction of the ultimate parent entity does not require filing, b) when the jurisdiction of the ultimate parent does not have a Qualifying Competent Authority Agreement, or c) in case there has been a “Systematic Failure” in the jurisdiction of the ultimate parent entity. In those cases a “Surrogate Parent Entity” can substitute the ultimate parent company and file the CbC Report on behalf of the MNE Group.
  • If no (Surrogate) Parent is appointed, local members of MNEs are obliged to file CbC at a local level.

Confidentiality and exchange of information
Countries have emphasized the need to protect tax information confidentiality. The guidance confirms that the primary method for sharing such reports between tax administrations is through the automatic exchange of information, pursuant to government-to-government mechanisms such as bilateral tax treaties, the multilateral convention on mutual agreement assistance, or tax information exchange agreements. In certain exceptional cases, secondary methods, including local filing, may be used. To facilitate the automatic exchange of information, an XML Schema and a User Guide will be developed by the OECD.

Impact of Action 13 for the Netherlands

Dutch government implements OECD guidance in the Dutch Corporate Income Tax Act
According to the current wording of the proposed law, as from January 1, 2016, parent companies of Netherlands based multinationals with a turnover of a minimum of EUR 750 million will be required to file the new CbC Report within 12 months following fiscal year end closing. The first CBC reports would be filed in 2017 and can be filed in either English or Dutch. The proposed law generally is in line with the CbC reporting implementation package, issued by the OECD in June 2015. This requires taxpayers to disclose per country information on revenues, profit before income tax, corporate income tax paid, corporate income tax as included in the annual accounts, stated capital, accumulated earnings, number of employees, and tangible assets other than cash and cash equivalents.

Non-compliance due to intentional or gross negligent behavior of the reporting entity regarding its obligation to file the CbC-Report could lead to a penalty up to EUR 20,250 or criminal prosecution.

Master and Local File
In addition to the introduction of CbC Reporting the Dutch government announced more stringent documentation requirements for MNE group entities that are tax resident in the Netherlands and are part of a group that has a consolidated turnover exceeding a threshold of EUR 50 million. The group entity will be required to file a Master File that provides an overview of the MNE as a whole, including the nature of its activities, its general transfer pricing policy, and its global allocation of income and economic activities. A Local File also needs to be in place, which reflects information that is relevant for the transfer pricing analysis relating to transactions between the tax payer and related parties in other tax jurisdictions. An important and new requirement is that the Master File and the Local File need to be part of the entity’s administration prior to filing the tax return. This is a major change from the current practice which requires the tax payer to provide transfer pricing documentation within two months after a formal request has been issued by the Dutch Tax Administration. Non compliance with the documentation requirements results in the reversal of the burden of proof.