Category: News

Building on the insights from our Tax and Energy Country Guide released last year, we are delighted to launch Taxand’s Tax and Energy Newsletter—a dedicated resource delivering expert perspectives and the latest global updates on energy taxation.

Please find the edition here.

On March 11, 2025, the Council of the European Union reached a political agreement on the ninth amendment to the Directive on Administrative Cooperation in taxation, commonly referred to as “DAC9”.  This amendment aims to streamline and simplify tax reporting obligations for multinational enterprise groups (MNEs) and large-scale domestic groups (LSDGs) operating within the EU.​

The OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) has recently published the Consolidated Report on Amount B, compiling all relevant materials on the subject released throughout 2024. This report serves as a reference document, providing streamlined guidance for the application of the arm’s length principle to in-country baseline marketing and distribution activities. It is particularly aimed at addressing the needs of low-capacity jurisdictions, reducing compliance burdens, and enhancing tax certainty.

Reason for Publication 

The Inclusive Framework has been working on Amount B as part of the broader Two-Pillar Solution to address tax challenges arising from the digitalization of the economy. The initial guidance was published in February 2024 and incorporated into Chapter IV of the OECD Transfer Pricing Guidelines. However, at the time of publication, certain administrative aspects remained unresolved, including definitions of “qualifying jurisdictions” and the list of jurisdictions within scope of the political commitment on Amount B. Subsequent clarifications and agreements in June and September 2024 led to the need for a consolidated report that brings together all relevant materials in one place for ease of reference.

Changes from Previous Publications 

Unlike earlier reports, the Consolidated Report on Amount B does not introduce new guidance or modifications to previously published content. Instead, it compiles all statements and agreements made in 2024, ensuring that stakeholders have a single, comprehensive source of information. Key developments throughout the year include:

1. Finalization of jurisdiction definitions: The Inclusive Framework issued clarifications on the definitions of “qualifying jurisdictions” and “covered jurisdictions” in June 2024.
2. Model Competent Authority Agreement: In September 2024, the Inclusive Framework released a standardized agreement template to facilitate the implementation of Amount B across jurisdictions.
3. Focus on tax certainty: The guidance now emphasizes the importance of minimizing disputes by providing clear pricing frameworks and documentation requirements.

Key Considerations 

The Consolidated Report on Amount B reinforces the OECD’s commitment to simplifying transfer pricing compliance, especially for low-capacity jurisdictions. Some key points to note:

1. Scope of Application: The guidance applies to baseline marketing and distribution activities, with specific exclusions for entities assuming economically significant risks or owning valuable intangibles.
2. Simplified Pricing Framework: A three-step process determines a return on sales for in-scope distributors, enhancing predictability in transfer pricing assessments.
3. Implementation Timeline: The guidance is elective, with jurisdictions able to apply the simplified approach to qualifying transactions from fiscal years commencing on or after January 1, 2025.

The Three-Step Pricing Approach 

The simplified pricing framework introduced in the report follows a structured three-step approach:

1. Industry Grouping Classification – The tested party is classified into one of three industry groupings based on the type of goods it distributes. This ensures an industry-specific approach to pricing.
2. Factor Intensity Classification – The tested party is assessed based on its net operating asset intensity and operating expense intensity. These factors help determine the appropriate profit margin range.
3. Determination of Return on Sales – A pricing matrix is applied, combining the industry grouping and factor intensity classification to establish an arm’s length return on sales within an acceptable range.

Potential Challenges and Implementation Concerns 

One notable concern regarding Amount B is that its adoption is not mandatory for all jurisdictions. As the regime is elective, some countries may choose to implement it while others may not, leading to potential mismatches in transfer pricing outcomes. This fragmentation could result in disputes between tax authorities, particularly where one jurisdiction applies the simplified framework while another adheres to traditional transfer pricing rules. Such inconsistencies may reduce the intended benefits of simplification and tax certainty, potentially leading to double taxation or compliance complexities for multinational enterprises.

Final Thoughts 

The publication of the Consolidated Report on Amount B is a significant step in the OECD’s broader BEPS project, ensuring that transfer pricing rules remain clear and effective. Taxpayers and advisors should review the consolidated guidance to understand its implications fully and prepare for potential implementation in relevant jurisdictions. As always, continued engagement with tax authorities and adherence to documentation best practices will be key to leveraging the benefits of this framework effectively. Depending on the specific facts and circumstances (business and location), there may be instances where the application of Amount B proves advantageous for businesses, particularly when the principles of Amount B align with their existing pricing practices and operational structure. It is essential to evaluate each case individually to determine how the implementation of Amount B can drive efficiencies, simplify compliance processes, and ensure consistent adherence to evolving international transfer pricing regulations.

Three Key Changes and What They Mean for Businesses

 

On March 11, 2025, the Economic and Financial Affairs (ECOFIN) Council gave the final green light to a package of laws to make EU VAT rules fit for the digital age. The adopted package includes a directive, a regulation and an implementing regulation, and makes changes to three key aspects of the current EU VAT system. These reforms, designed to enhance competitiveness and reduce administrative burdens, will impact businesses operating across the EU.

The new rules will:

– fully digitise VAT reporting obligations for businesses selling goods and services to other EU member states by 2030;

– require online platforms to pay VAT on short-term accommodation rentals and passenger transport by road, in cases where individual service providers do not charge VAT themselves

– improve and expand online VAT one-stop shops so that businesses do not have to register for VAT separately in each member state in which they operate.

Here are the three most significant changes and their potential effects on companies.

1. New VAT Rules for the Digital Economy

One of the most impactful changes is the revision of VAT rules to align with the digital age. The new framework introduces a Union-wide digital reporting system that will require businesses engaged in cross-border transactions to provide transaction-level reporting. Additionally, electronic invoicing will become the default system, reducing opportunities for VAT fraud and streamlining compliance for businesses operating in multiple member states.

Impact:

• Businesses will need to adapt their invoicing and reporting systems to comply with new real-time VAT reporting obligations.
• Companies selling goods or services across EU borders will face stricter data-sharing requirements with tax authorities.
• While administrative burdens may initially increase, long-term benefits include reduced VAT fraud and more efficient tax administration.

2. Expansion of the One Stop Shop (OSS) Scheme

To further reduce the need for multiple VAT registrations across the EU, the reforms expand the OSS scheme, which currently simplifies VAT compliance for e-commerce businesses. The new rules will allow more types of transactions to be covered, including business-to-consumer (B2C) sales of goods within the same country if facilitated by an electronic platform.

Impact:

• Companies selling directly to consumers in multiple EU countries may avoid registering for VAT in each jurisdiction.
• Digital platforms facilitating sales of goods and services will take on greater VAT responsibilities, potentially simplifying compliance for small businesses using their services.
• Businesses should assess whether their transactions qualify under the expanded OSS scheme to optimize their VAT compliance strategy.

3. Stricter Rules for Online Platforms

New VAT obligations will be imposed on digital platforms that facilitate short-term accommodation rentals and passenger transport services, being the largest sectors in the current platform economy. Under the “deemed supplier” model, platforms involved in passenger transport by road and short-term rental services will be responsible for collecting and remitting VAT when their underlying suppliers are not VAT-registered businesses.

Impact:

• Businesses in the platform sharing economy should review their VAT obligations and seek guidance to avoid unexpected liabilities.
• Digital platforms will need to implement systems to determine the VAT status of their users and collect VAT where necessary.
• Small service providers using these platforms may see an indirect increase in their costs as VAT is applied to more transactions.

Next Steps for Businesses

The Council has urged the European Commission to develop an action plan by autumn 2025, with further stakeholder consultations expected. Businesses should start preparing now by:

• Reviewing internal VAT reporting and invoicing systems to ensure compliance with upcoming digital reporting requirements.
• Assessing whether they can benefit from the expanded OSS scheme to reduce VAT registration burdens.
• Monitoring developments in platform taxation and adjusting pricing models accordingly.

These reforms mark a significant step toward a more streamlined and fraud-resistant EU VAT system. Companies operating within the EU should take proactive measures to ensure compliance and avoid potential risks. The first changes should be applicable from January 1, 2027. The changes should be fully adopted and enforceable on businesses by 2030.

If you have any questions about how these changes may affect your business, consulting with a tax professional is highly recommended. Please contact Richard Meerstra or Martijn Jaegers if you would like to receive further information.

On 10 December 2024, the EU Council voted in favour of the EU Faster Directive. The EU Faster Directive aims at improving EU withholding tax refund/relief processes, for publicly traded shares and bonds.

Ultimate purpose is to minimize WHT refund procedures, by enabling eligible investors to claim relief-at-source from local WHT. For more background information, see the European Commission’s dedicated webpage.

Next steps

• As a next step, EU member states are obliged to implement the FASTER Directive by 1 January 2028, in order to apply from 2030 onwards.
• Governments are allowed to implement earlier if they wish so.

Takeaway

• The Directive represents a significant step towards simplifying withholding tax relief processes while imposing new compliance measures. Both financial intermediaries as well as (institutional) investors should be prepared to align with these changes once enacted.
• We recommend (publicly traded) businesses and fund managers to closely monitor the adoption of these rules by EU Member States, to timely anticipate on the operational benefits that the FASTER Directive will offer.

• As part of the 2025 Dutch tax plans, Dutch tax law will be amended from 1 January 2025 in a way that a Dutch ‘Commanditaire Vennootschap’ partnership will in principle classify as tax transparent. Currently, tax transparencv requires that the LPA provides for unanimous consent on any LP admission/transfer/relative-change-of-ownership.
• The new tax law includes a rule that entails potential overkill for CV’s that classify as ‘investment fund’ for Dutch securities law purposes (basically: funds with a regulated/registered/exempt manager). These CV’s may classify as non-tax-transparent from 2025 onwards, hence subject to Dutch corporate tax on their worldwide income, and withholding tax on distributions. Two exceptions apply:

• 1. The CV is an active PE fund. No guidance is given to the definition of ‘active PE fund’. Controlling majority stakes are important indicators. It is yet unclear if the exception equally applies to venture capital funds.
  2. Amendment of the LPA in a way that LP interests can – basically – only be transferred via the Fund, i.e. through redemption and subsequent issuance.

• On the second exception: in reply to criticism by the Dutch fund industry on the timing constraints of amending LPA before 2025, the government has announced that such amendment may also be done in 2025, provided that the fund manager expresses its intention to amend still in 2024.
• The overkill rule above is considered an unfortunate development. Whilst the rule was initially meant to apply to foreign (i.e. non-Dutch) real estate funds only, the rule unfortunately also applies to certain Dutch funds.
• Last week, in reply to criticism by the Dutch fund industry, the Dutch government has agreed to review this overkill rule in the first half of 2025. Whilst the outcome of this review is uncertain, the government may conclude to amend the overkill rule. More news is expected in the second half of 2025 – probably in September as part of the Tax Plans 2026.

On September 17, 2024, the Tax Plan for 2025 was published. We have created an overview of the main changes for you.

See attachment.

As per 2025, new rules will apply to the classification of Dutch and foreign entities as transparent or non-transparent.

Dutch (CV) and foreign limited partnership entities will classify as tax transparent by default. Hence, in principle no ‘unanimous consent’ required anymore on LP admissions/transfers (current requirement).

However, the government introduces an exception to certain Dutch and foreign fund entities engaged in ‘passive’ investments. These will classify as non-transparent and become subject to Dutch taxes. A carve-out applies to fund entities engaged in ‘active’ investments, or implementing a ‘redemption-only’ liquidity mechanism. Implementation may take place in 2025, subject to conditions.

See flowchart on the next slide for more details.

 

 

Per 2025, the Dutch limited partnership (CV) and foreign similar entities will classify as tax transparent by default. This will apply to
the Dutch CV, and foreign similar LP entities like SCSp, LP and KG.

• The default classification as tax transparent implies that the current “unanimous consent” requirement on LP admissions and transfers (currently relevant to classify as tax transparent) will no longer be a requirement to qualify as tax transparent as of 2025.
• A specific exception will apply to certain fund entities.
• The Dutch tax classification of foreign entities incomparable to a Dutch legal entity (e.g. UK LLP, Irish ULC, German KgAA, French SCPI) will align with the entity’s tax treatment in the foreign jurisdiction (symmetry approach). An exception applies if the foreign entity is resident in the Netherlands, which will result in a non-transparent classification (fixed approach).
• A deemed disposal rule will apply to Dutch and foreign entities switching their Dutch entity tax classification from non-transparent to tax-transparent, both at entity and investor level.
• Certain transitional rules and roll-over relief will be available, subject to meeting certain conditions.

Please join our Taxand professionals from around the world, as we gather in Paris for Taxand’s Transfer Pricing Conference 2024. Here we will share the latest developments impacting cross-border business operations.