To simplify and streamline the calculation of an at arm’s length remuneration for baseline marketing and distribution activities the OECD’s Pillar One-initiative offers a standardised formula: “Amount B”.
Although the transfer pricing methodology of Amount B has been adopted by over 60 countries so far, the Netherlands has opted not to apply it to transactions performed by baseline marketing and distribution entities in the Netherlands. In this article our Transfer Pricing experts discuss the geographical scope of Amount B, with a focus on the consequences and opportunities in the Netherlands.
Amount B: simplified approach
When groups use local marketing and distribution entities in different countries, this used to lead to different methodology in different countries, frequent discussions with local (tax) authorities and relatively high compliance costs. Amount B streamlines Transfer Pricing, or “TP”, for such baseline marketing and distribution activities by offering a standardised formula, reducing disputes and compliance burdens. This new framework will be effective for the so-called “covered jurisdictions” and other countries which voluntarily adopt the approach, for financial years starting on or after January 1, 2025.
Our experts discuss the economic the scope, eligibility and the practical application of Amount B.
[Read more here].
Geographical scope of Amount B
Currently, over 60 jurisdictions are ‘covered’ by Amount B. As of March 2025, the list includes Brazil, Mexico, Argentina, South Africa and several European countries. Meanwhile, quite a few other countries (including the USA) are considering implementing Amount B in the near future.
The standardised methodology of Amount B covers various baseline marketing and distribution functions, such as buying goods for resale, promotional activities, warehousing, customer identification, sales processing, invoicing, and customer support. If Amount B applies in a particular jurisdiction, calculation of an arm’s-length remuneration for such in-scope transactions will follow a standardised methodology. At the same time, different TP rules may apply to the counterparty of that transaction, if the counterparty is located in a jurisdiction which does not accept the Amount B approach.
Does Amount B affect other states?
Jurisdictions that do not make use of Amount B generally have their own set of rules for determining an at arm’s length remuneration. They may for example follow the OECD Transfer Pricing Guidelines, but interpretation may differ from jurisdiction to jurisdiction.
In cases where tax authorities do not apply Amount B nationally, they may still accept the outcome of applying such an approach in a counterparty’s jurisdiction. This should help to address double taxation issues. However, if a jurisdiction does not accept the outcome of applying the Amount B approach in the counterparty’s jurisdiction, double taxation may eventually arise. This is especially likely in situations where a group does not address the inconsistencies of the local versus counterparty’s approaches beforehand.
Ideally, these discrepancies should be addressed while designing the transfer pricing policies for baseline distribution and marketing activities. For instance, if only one of the two parties is located in a jurisdiction that applies Amount B, it may well be worth investigating whether the outcome of the Amount B (i.e., margin to be applied) is also supportable by a benchmarking study in another party’s jurisdiction.
The Netherlands and Amount B
The Netherlands has not recognised Amount B as an accepted method for Dutch taxpayers with baseline marketing and distribution activities within the Netherlands. The arm’s-length remuneration of such activities will need to be determined based on “standard” transfer pricing methods, as appropriate.
But Amount B is recognised as an appropriate way of determining the remuneration for a foreign baseline marketing and distribution entity abroad, if that entity is established in a jurisdiction that applies Amount B (and the transaction meets the requirements for Amount B). In such cases, the outcome of applying the Amount B approach in such covered jurisdiction will be deemed acceptable for Dutch tax purposes and will not need to be corrected or substantiated further.
Additionally, in December 2024 the Netherlands announced its intention to implement measures to prevent or eliminate double taxation resulting from the application of Amount B. This would apply to jurisdictions that have incorporated Amount B into their laws and regulations during the relevant year and have an existing tax treaty with the Netherlands.
Determining consequences and identifying opportunities
Businesses need to analyse how the indicative margins of Amount B may affect their profitability. This is also the case for Dutch groups with entities performing baseline marketing and distribution activities abroad. For Dutch tax purposes, the outcome of the application of Amount B abroad may often help preventing double taxation. In addition, where Amount B is applicable, it could be used by groups as a valuable tool to optimise compliance costs.
The Transfer Pricing experts at Baker Tilly would be happy to assist you in this matter. If you have any questions about Amount B, TP compliance or our transfer pricing advisory services, please do not hesitate to contact our Transfer Pricing Desk.
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
