Executive summary

The Hague Court of Appeal (Gerechtshof Den Haag), on 10 September 2026, published its interim and final decisions in a dispute under Article 8b of the Dutch Corporate Income Tax Act (Wet Vpb) concerning intragroup credit facilities that combined a margin over the Euro Interbank Offered Rate (EURIBOR) on drawn amounts with commitment fees calculated over the entire facility, including undrawn headroom.

The court accepted a total-cost approach applied ex ante on the basis of EURIBOR forward rates for four of the five facilities and assessed the fifth facility, which is not a loan, on the basis of the commitment fee alone. The court held that the required returns had not been filed and reversed and increased the burden of proof for all years. On that basis, it upheld the tax inspector's adjustments for three facilities, limited the adjustment for a fourth, and canceled the adjustment for a fifth. In addition, the interest on tax charged was reduced. Taken together, the interim and final decisions set out the court's approach to total-cost pricing, credit rating methodology, comparability analysis and the evidential consequences of documentation that is not available at the time of filing.

Background

The taxpayer, a Dutch company forming part of an internationally operating group, deducted interest and commitment fees on a number of intragroup facilities (referred to in the decision as facilities #1, #3, #3a, #5 and #7bn) over the financial years 2012/2013 through 2016/2017. Interest was charged as a fixed margin over the EURIBOR on drawn amounts, while commitment fees were charged as a fixed percentage over the full facility amount.

The tax inspector took the position that the total remuneration was not at arm's length, issued additional assessments for 2012/2013 and 2013/2014 and adjusted the assessments for the later years. In its interim decision, the court ruled without reservation that the facilities (1) were not sham transactions, (2) were not in themselves non-arm's length and (3) did not constitute an abuse of law, and that (4) the remuneration could be tested on a total-cost basis per facility. The court subsequently reopened the investigation to allow the tax inspector to substantiate what the arm's-length total remuneration would have been, using the taxpayer's own credit ratings.

Decision

Ex ante application of the total-cost approach

The court confirmed that pricing is determined at the moment the facility is entered into, when the actual development of EURIBOR is not yet known. Referring to paragraphs 3.73, 3.74 and 6.32 of the 2010 Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines, the court held that the assessment must be based on what independent parties could reasonably have foreseen, without the use of hindsight. In the court's view, EURIBOR forward rates provide an appropriate basis to project the total repayment amount and to convert the total contractual remuneration into a single margin over a floating rate. The court rejected the tax inspector's ex post approach using hindsight.

Two-step process

The ex ante margins serve only to determine whether the pricing is non-arm's length (step 1). If a correction is warranted, the annual remuneration is recalculated by applying compound interest at the arm's-length margin to the principal actually drawn, without taking additional commitment fees into account (step 2).

Creditworthiness

The tax inspector argued that the borrowers' credit ratings were too low because the taxpayer's standalone rating models were deficient and its analyses at the time of filing did not properly account for implicit support. In the tax inspector's view, appropriate implicit support would have placed the borrowers in the "core" to "highly strategic" categories. The taxpayer maintained that its ratings appropriately reflected both standalone creditworthiness and implicit support. The court ruled for the taxpayer on facilities #1, #3, #5 and #7bn, but ruled for the tax inspector on facility #3a.

Framework for comparables

The court endorsed the tax inspector's selection criteria (comparable size, debtors established in the Netherlands or Western Europe, the same industry classification standard sector) and confirmed that with a small set of relatively comparable transactions, no interquartile range is required and no averaging needs to take place. Accordingly, the comparable most favorable to the taxpayer (at the top of the range) may be used. If credit rating agencies diverge, the court said, the rating by a specific rating agency should be followed because the taxpayer used the same specific agency's methodology for credit rating purposes. The court also said that differences in currency may be addressed through a currency swap rather than by eliminating the comparable. Comparables should be eliminated when differences, particularly those related to country of residence or arising from a parent guarantee or keep-well agreement that shifts the pricing perspective to another jurisdiction, cannot be adjusted with sufficient reliability. The court confirmed that where a range is used, the tax inspector may not adjust beyond the top of that range, and that an adjustment to the median goes further than is necessary to bring the profit to an arm's-length level. The court also confirmed that if several adjustments would be required to a given comparable while better comparables are available, elimination of that comparable prevails over adjustment.

Rejected adjustments

The court accepted that a private loan may, in principle, command a higher margin than a tradable bond, referring to paragraph 10.93 of the 2022 OECD Transfer Pricing Guidelines, but found the court file provided insufficient basis to quantify that effect reliably; estimates in the proceedings ranged from under 20 basis points to 140-170 basis points. The court also rejected adjustments for country of residence and location of operations, based on a regression analysis the taxpayer submitted, finding that (1) those factors were already taken into account through the selection of Western European comparables and the credit rating itself, and (2) the underlying dataset, correlation matrix and year fixed effects had not been made transparent. (A "year fixed effect" is a variable included in a statistical model to control for factors that affect all observations in a particular year.)

Outcome per facility

Applying the comparable most favorable to the taxpayer, the court first established, under the ordinary rules of evidence, arm's-length margins of 2.89% for facility #1, 0.78% for facility #3a and 2.11% for facility #7bn, and an arm's-length interest margin of 2.51% for facility #5. Those margins are above the margins advocated by the tax inspector but below the total-cost margins recalculated on an ex ante basis for facilities #1, #3a and #7bn, and below the all-in rate of 5% used by the taxpayer for facility #5. For facility #3, the court found that the recalculated total-cost margin of 4.11% fell within an arm's-length range.

In addition, the court held that facility #5 is not primarily a loan but a separate type of credit agreement under which the borrower may draw funds if required, so that the total-cost approach does not apply to it. The commitment fee was therefore assessed on a stand-alone basis. The court held that a commitment fee set at 40% of the all-in rate was not shown to fall outside the arm's-length range, but that the all-in rate of 5% serving as its basis was not at arm's length. The remuneration for this facility must be recalculated on the basis that the commitment fee is charged over the undrawn part of the facility only, interest is charged over the drawn part and the commitment fee is not deducted from the arm's-length margin.

Burden of proof and awareness

The court held that the taxpayer had not filed the "required returns" because the accepted corrections for each year resulted in substantially more tax being due than was reported in the tax returns, both in absolute and relative terms. The court also noted that the taxpayer had not demonstrated that contemporaneous creditworthiness analyses were available when the returns were filed and established that the taxpayer met the awareness criterium. The burden of proof was therefore reversed from the tax inspector to the taxpayer and increased to "making evident" (doen blijken). The court also found that the objectified awareness requirement under Article 8b Wet Vpb was met, and that no defensible position (pleitbaar standpunt) existed, as the deficiencies concerned purely factual matters of valuation.

New fact and interest on tax

The return corrections rested on comparables that only became known to the inspector on appeal, thus constituting a "new fact" that justified the additional assessments. The court therefore concluded that the tax inspector had not committed an administrative omission.

Implications

The decision addresses the pricing of intragroup financing transactions and is relevant for any group with committed facilities, revolving arrangements or headroom in its intragroup financing structure. Three points in particular stand out:

1. Methodology: The decision establishes a practical framework for pricing intragroup facilities by endorsing an ex ante total-cost approach based on forward rates (without applying hindsight). If a correction is made, it is calculated by applying compound interest at the arm's-length margin to the principal actually drawn, with commitment fees disregarded. A credit rating built up from a standalone rating and an implicit support layer was accepted; the rating of the group was not taken as the starting point for the borrower's rating.
2. Comparables: In a small set of closely comparable transactions, the top of the range applies and averaging is not permitted. Adjustments, whether for liquidity, country of residence or location of operations, will only be accepted if their necessity and magnitude can be substantiated with a reasonable degree of accuracy. Sophisticated econometric evidence is not required, but where it is relied upon, the underlying data and model must be fully transparent. The court applied this reasoning to a regression study by disregarding it on the grounds that the dataset and correlation matrix had not been provided, the year fixed effects had not been described, the reported variance inflation factors indicated interdependence between the variables relied upon, and only part of the coefficients produced by the model had been applied.
3. Documentation: The reversal of the burden of proof turned on the absence of creditworthiness analyses at the time of filing, not on a defect in the documentation as such. Once the burden was reversed, the taxpayer had to convincingly demonstrate, for each facility, that a comparable was sufficiently similar and that any adjustment applied to it was accurate. Credit rating analyses and benchmarking support available at the time the tax return is filed, and comparables from directly competing issuers, are relevant to that standard.

Against this background, groups with intragroup financing arrangements may wish to consider: (1) confirming that credit rating and benchmarking support for each facility exists and is dated no later than the relevant tax return; and (2) retesting committed facilities on a total-cost basis determined ex ante where commitment fees are charged over undrawn headroom or over amounts already drawn. The court's decision also emphasizes that having transfer pricing analyses and documentation available when filing the tax return is essential for providing the required evidence.

An appeal in cassation to the Dutch Supreme Court may be lodged within six weeks of the date of the decision. It is not known at the date of this Alert whether an appeal in cassation has been lodged. The Court of Appeal's decision is not final. (These decisions are published under ECLI:NL:GHDHA:2026:2462 (final decision) or ECLI:NL:GHDHA:2025:3019 (interim decision).) No penalties were imposed in these proceedings.