Verleggingsregels

Verleggingsregels, often translated as "transfer pricing rules" or "rules on shifting profits," refers to a set of regulations and guidelines that govern how multinational enterprises (MNEs) allocate profits and expenses among their various subsidiaries and entities located in different countries. The core principle behind verleggingsregels is the arm's length principle, which dictates that transactions between related entities should be priced as if they were conducted between independent parties. This means that the profits recognized in each jurisdiction should reflect the economic substance of the activities performed and the risks assumed by each entity.

These rules are crucial for tax authorities worldwide as they aim to prevent MNEs from artificially shifting profits to low-tax jurisdictions, thereby eroding the tax base of countries where economic activity actually takes place. When an MNE sells goods or services from one subsidiary to another, the price charged, known as the transfer price, must be justifiable. If the transfer price is too low, profits are shifted from the seller's country to the buyer's country. Conversely, if the price is too high, profits are shifted from the buyer's country to the seller's country.

Tax authorities scrutinize these intercompany transactions. If they determine that the transfer prices do not adhere to the arm's length principle, they can adjust the taxable profits of the entities involved, leading to additional tax assessments, penalties, and interest. The implementation and interpretation of verleggingsregels can be complex, often requiring detailed documentation and analysis of functional, asset, and risk profiles of the related entities. International efforts, such as those by the OECD, aim to provide a common framework and guidance for countries to apply these rules consistently and reduce the potential for double taxation and tax avoidance.