Following the OECD BEPS review, countries have started adopting the various recommendations into local tax law albeit this is not being done in a particularly uniform or coordinated way. Transfer pricing is one of the areas were there is not a consistent approach.
From a transfer pricing documentation perspective the OECD recommended that large multinational groups adopt a “master file/country” file approach. For most territories “large” is group revenues of Eu750m or more. The UK has not adopted the OECD recommendations in a prescriptive manner and we also have the SME exemption so transfer pricing documentation and in particular the master file/country approach will not be on the agenda for many.
However from 1 January 2016 the Dutch authorities have made this approach a prescriptive requirement to support Dutch tax returns and the threshold for compliance is only Eu50m rather than Eu750m. This means that Dutch subsidiaries of UK groups turning over more than Eu50m euros will need to have a master file and country file in support of their tax returns.
The master file will normally be prepared by the parent/head office so even though a master file may not be needed for UK tax purposes one would still need to be prepared.
For further information: contact the NBCC