As scale-ups expand their operations internationally, one of the key challenges they face is ensuring compliance with cross-border regulations, particularly around transfer pricing. Many scale-ups are confronted with this topic for the first time as they grow beyond their home market. In this blog, we explore what makes transfer pricing for scale-ups unique, and what to consider when setting up a compliant and future-proof policy, especially when operating in or through the Netherlands.
Why transfer pricing matters for scale-ups
Transfer pricing is the practice of determining prices for transactions between related entities within the same group. This includes anything from internal services and product sales to intellectual property and financial transactions. The global standard to ensure fair pricing is the arm’s length principle, which requires that intra-group transactions are priced as if they were agreed upon between independent parties acting in the open market under comparable circumstances. This principle is amongst others laid down in the OECD TP Guidelines and Dutch TP decree.
For scale-ups, designing an appropriate transfer pricing policy can be even more challenging due to their dynamic nature. As their operations are often-fast-moving, innovative and not yet profitable it creates challenges in accurately delineating and pricing intercompany transactions.
Why the Netherlands
The Netherlands is a popular base for international scale-ups. Thanks to its strong infrastructure, strategic location, reliable legal system and access to top talent, it offers an ideal springboard into the wider European market. But setting up or expanding operations here also means dealing with Dutch tax and compliance obligations—including local transfer pricing documentation requirements. Ignoring these can lead to audits, disputes, or financial penalties.
Key transfer pricing considerations for scale-ups
When designing a transfer pricing policy that works for a fast-growing business, several aspects deserve extra attention:
1. Employee mobility
Scale-ups often rely on internationally mobile talent. Founders, C-level executives and key decision-makers frequently work across borders. Their presence and decision-making power in different countries can influence where value is considered to be created, and thus where profits should be taxed. This needs to be clearly reflected in your transfer pricing setup.
2. Intellectual property (IP) and DEMPE functions
Many scale-ups rely on valuable intangibles — both legally protected IP like patents and trademarks, and 'soft' IP such as algorithms, data, and technical know-how. While the legal owner may be entitled to receive the direct proceeds from exploiting the intangible, other group entities may have performed functions, used assets, or assumed risks that contribute to its value. According to OECD guidelines and Dutch TP decree, you must look beyond legal ownership and focus on the DEMPE functions—Development, Enhancement, Maintenance, Protection, and Exploitation. Different group entities involved in these activities may be entitled to a share of the returns or bear a portion of the associated costs and risks.
3. Business strategies and temporary losses
Scale-ups often adopt aggressive strategies to grow fast, like entering new markets with lower pricing, or investing heavily in talent and product development. While these strategies may result in short-term losses, they are typically aimed at capturing long-term value. It is important that your transfer pricing policy reflects such rationale and show why and how certain group entities are bearing costs or risks.
4. Local market conditions
Each country has unique features—such as access to subsidies or grants, to a specific talent pool and the presence of existing infrastructure. These factors may influence the transfer pricing policy in various ways. It is important that these unique local market features are taken into account and carefully assessed when designing the transfer pricing policy.
5. Financial transactions
Funding is a key theme for scale-ups. Beyond initial capitalization, ongoing cash flow management and allocation require careful attention when designing the transfer pricing policy. In line with Dutch and OECD guidance on financial transactions, it is essential to assess factors such as commercial rationality, other options realistically available, debt service capacity, and the overall creditworthiness of the entities involved.
Building a transfer pricing policy that scales with you
A robust transfer pricing policy for scale-ups is not just about compliance. It also supports sustainable growth by aligning tax positions with the business reality. It helps prevent future disputes, facilitates funding rounds, and can even speed up expansion into new markets by providing clarity to local tax authorities.
At Bol International, we support growing businesses in designing practical and scalable transfer pricing policies. Our team combines deep technical expertise with a hands-on, entrepreneurial approach—ideal for the pace and ambition of international scale-ups.
Want to learn more about transfer pricing in the Netherlands or assess your current setup? Don’t hesitate to reach out to our specialists. We’re here to help you grow—compliantly, and with confidence.
