The facts
[X1] B.V. and [X2] B.V. (together, ‘the taxpayer’) are Dutch companies that formed the head of a large Dutch fiscal unity holding a major tobacco group’s European operations. The ultimate parent was [B] p.l.c., an international tobacco group. The Dutch fiscal unity comprised approximately 600 employees engaged in production, distribution, brand exploitation, and holding and financing activities.
The case covers tax years 2008–2016 and involves multiple transfer pricing corrections. The two FTTP-critical issues are the guarantee fees and the factoring fees. The court also decided a major IP termination question (the ‘F-exit’) which is outside the scope of this FT Case.
Guarantee fees
The Dutch taxpayer issued listed bonds on public capital markets. The ultimate parent [B] p.l.c. — a UK-listed entity with a group-level credit rating — provided a guarantee over those bonds and charged the Dutch entity annual guarantee fees for the years 2008–2016. The fees were deducted as a cost of the financing.
The tax authority challenged the deductibility of the guarantee fees, arguing that the Dutch entity was a ‘core company’ (kernvennootschap) of the group within the meaning of S&P’s criteria for assessing implicit group support. On that basis, the market already assumed the Dutch entity would be supported by the group in the event of financial difficulty, so its standalone credit rating was already equivalent to the group’s rating. If so, the parent’s explicit guarantee provided no incremental creditworthiness benefit — it was not an identifiable service for which an arm’s length fee was payable.
Factoring fees
Dutch subsidiaries ([I] B.V. and [E] B.V.) paid factoring fees to [H] v.o.f., a group coordination centre established in Belgium, under a Receivables Purchase Agreement dating from 1999. [H] performed credit risk analysis, set and monitored credit limits, and handled collections and administration. The fees ranged from approximately €3–4m per year. The Belgian entity held an excess-profit ruling from the Belgian tax authorities covering 80–92 per cent of its factoring income as non-taxable ‘excess profit’. The Dutch authority challenged the fees after the Belgian ruling was disclosed in 2014, arguing they substantially exceeded what an arm’s length coordination centre would have charged given [H]’s actual limited functions and risks.
The litigation
Guarantee fees — S&P core company analysis and implicit support
The court upheld the authority’s position in full. The analysis rested on S&P’s published criteria for determining which entities within a corporate group benefit from implicit group support to the extent that their standalone credit rating is raised to match the group’s rating. S&P identifies ‘core’ entities as those so central to the group’s identity, strategy, and operations that the group would provide support unconditionally. For such entities, the credit markets already price in that implicit support when the entity borrows.
The court found that the Dutch entity met the S&P criteria for a core company: it was the parent’s primary operating platform for a major region, it held essential brand rights, it housed significant production and distribution activities, and it was integral to the group’s global strategy. Accordingly, the Dutch entity’s ‘derived rating’ — its rating as a group member benefiting from implicit support — was equivalent to the group’s own rating. The explicit guarantee from [B] p.l.c. therefore added nothing; the bond market had already priced in the same group backing. There was no separate intragroup service and no arm’s length fee was payable.
The taxpayer argued that the explicit guarantee was a distinct legal commitment that went beyond the market’s informal expectations and therefore did constitute a service. The court rejected this. The economic substance of the guarantee — the actual credit benefit to the bond market — was already present through implicit support. Paying for something that provides no incremental benefit is not arm’s length behaviour.
On timing, the court accepted that for most of the years 2008–2013 the taxpayer had a plausible (pleitbaar) position given uncertainty about the implicit support doctrine in Dutch practice. It treated the Dutch TP Decree of 26 November 2013 as the point at which the doctrine became sufficiently established that the taxpayer could no longer claim a plausible position. From 2013 onwards, guarantee fees were non-deductible without the need for any plausibility argument.
Factoring fees — non-arm’s length and penalties
The court upheld the correction of factoring fees across all years, finding that the risk-premium element of the fees substantially exceeded what an independent coordination centre performing [H]’s actual functions would have charged. The Belgian excess-profit ruling — which acknowledged that 92.4 per cent of [H]’s income was ‘synergy value’ not attributable to its own contributions — was treated as strong evidence of non-arm’s length pricing.
The court also applied the reversed and increased burden of proof (omkering en verzwaring van de bewijslast) under Art. 27e AWR from 2011, holding that the taxpayer had not filed the required tax return given the combination of the guarantee fee and factoring fee corrections, which were both absolutely and relatively material. This required the taxpayer to demonstrate ‘beyond doubt’ (overtuigend aantonen) that the corrections were wrong. The court confirmed this sanction can be applied in transfer pricing disputes. It upheld penalties of over €2.2m for the factoring fee corrections, while annulling a €125m penalty on the F-exit correction on the specific facts that the taxpayer had written to the authority before filing the 2016 return to flag its position.
ajiho commentary
The implicit support doctrine — from concept to courtroom
This is the most significant Dutch appellate ruling on implicit support and guarantee fees in the FTTP field since the doctrine became mainstream following the 2020 OECD Chapter X guidance. The court has now confirmed, in a major multi-year case, that the S&P core-company framework is a legally valid and sufficient basis for the Dutch tax authority to disallow guarantee fee deductions entirely.
The mechanics matter. The question is not whether the parent guarantee is legally binding or whether it has any value in the abstract. It is whether the guarantee provides an incremental economic benefit to the guaranteed entity beyond what the market already assumes through implicit group membership. If the entity is already priced as a core group member, the explicit guarantee is economically redundant and no arm’s length fee is payable. Groups that are clearly core — major regional operating hubs, entities that hold group brand rights, entities whose distress would be existential for the group’s reputation — face a much harder argument than groups that can show a standalone rating meaningfully below the group rating.
The 2013 bright line — and its 2020 analogue
The court’s treatment of the pre-2013 years is instructive. It accepted that the doctrine was sufficiently uncertain before the Dutch TP Decree of 26 November 2013 that a taxpayer had a plausible position in deducting guarantee fees; after that date, the position was no longer plausible. The broader point is that courts are drawing temporal lines based on the development of administrative practice. The OECD Chapter X guidance issued in 2020 is more explicit than anything that preceded it on the interaction between implicit support and explicit guarantees. Groups in all jurisdictions should treat 2020 as an analogous bright line to the Dutch 2013 date.
Two outbound flows, one reversed burden of proof
The court upheld corrections on both the guarantee fees (the Dutch entity over-paying its parent) and the factoring fees (the Dutch entity over-paying a Belgian coordination centre). The Dutch entity was simultaneously over-paying up the chain in two directions. That combination — multiple non-arm’s length outbound payments producing a material understatement of Dutch taxable income — is what triggered the reversed burden of proof. Groups with multiple intercompany cost flows running out of a single operating entity should be alert to this compounding dynamic.
What this means for your business
Any group with Dutch entities paying guarantee fees to a parent or group entity should now assess whether the Dutch entity meets the S&P core-company criteria. If it does, the guarantee fee is at risk of full disallowance — not reduction to a lower arm’s length rate, but elimination entirely on the basis that no service is provided. The analysis should be documented contemporaneously and reviewed against the specific S&P framework criteria, not a general statement that the entity is ‘not fully supported by the group’.
For entities in other jurisdictions, the same analysis applies using whatever credit rating framework fits the borrower’s market. The OECD Chapter X guidance on implicit support (paragraphs 10.72–10.87) provides the international standard, and tax authorities across Europe have been applying it more aggressively since 2020. This case is a judicial endorsement of the approach at a major appellate level. Current-year positions should be fully supported.
Case reference
[X1] B.V. and [X2] B.V. v Inspecteur van de Belastingdienst · Gerechtshof Amsterdam, derde meervoudige belastingkamer · ECLI:NL:GHAMS:2025:2377 · 11 September 2025 · Zaaknummers 22/2467 t/m 22/2475, 24/40 t/m 24/43 en 24/57 t/m 24/60
Judgment in Dutch. Prior instances: Rechtbank Noord-Holland, ECLI:NL:RBNHO:2022:8936, ECLI:NL:RBNHO:2022:8937, ECLI:NL:RBNHO:2023:12635. Cassation to the Hoge Raad possible. Access via rechtspraak.nl.