Dutch Court Upholds Transfer Pricing Adjustment in Agri B.V. Restructuring Case

July 2024

The Dutch Court of Appeal ruled on a transfer pricing dispute between “Agri B.V.” and the tax authorities concerning the valuation of profits following a 2009 restructuring. The company had declared €35 million in taxable profits, including €2 million in exit profits, but the authorities claimed over €350 million, arguing that Agri B.V. had effectively transferred a business to a Swiss affiliate without proper compensation.

Agri B.V. challenged this assessment, and in 2022, the District Court partially sided with the authorities but reduced the adjustment based on an expert valuation. Both Agri B.V. and the authorities appealed the ruling.

The Court of Appeal upheld most of the lower court’s findings, agreeing that additional value had been transferred without arm’s length remuneration, justifying a pricing adjustment. It also found that Agri B.V.’s failure to file the required return triggered a shift in the burden of proof under Section 27e AWR.

As a result, the court endorsed the adjusted profit determination while recognizing the lower bound set by the expert valuation.

Full Link to English Translation: https://tpcases.com/netherlands-vs-agri-b-v-july-2024-court-of-appeal-case-no-22-2419-eclinlghams20241928/