Transactions between affiliated companies should be at arm’s length, as if they were transactions between third parties. However, this is often not the case.
Particularly in cross-border transactions within multinationals, prices are mostly not at arm’s length. If the tax authorities discover this, they will adjust the agreed-upon prices to arm’s length prices. In practice, however, this appears to be quite complex. To solve this issue, many countries have implemented Transfer Pricing Rules.
If affiliated companies are established both in the Netherlands and in Germany, they will have to comply with Dutch and German Transfer Pricing Rules.
Dutch and German Transfer Pricing Rules: