The articles explore how The Netherlands, Belgium and Luxembourg have integrated the OECD’s DEMPE framework into their domestic Transfer Pricing practice for intangibles. They examine the legal framework, documentation requirements, administrative guidance, APA practice and key case law, highlighting how the tax authorities and courts apply DEMPE in audits, rulings and case law.

Highlights from each jurisdiction

The Netherlands

While Dutch tax law does not contain explicit provisions regarding the DEMPE approach, administrative guidance does address intangible assets and their treatment under this framework. Additionally, Dutch tax law includes specific provisions concerning intangible assets, amongst other things, amortisation limitations and the innovation box regime. In recent years, the Dutch tax authorities have increasingly applied the DEMPE approach in discussions related to intangible assets and generally align with OECD guidance on this matter. In these discussions, the Dutch tax authorities frequently scrutinise the functionality of the intangible asset’s owner to challenge the attributable remuneration.

The frequency of these discussions underscores the importance for taxpayers to carefully substantiate DEMPE-related functions in any transactions involving intangible assets. Comprehensive documentation, coupled with alignment between contractual terms and actual conduct, is critical to effectively mitigate potential challenges from the Dutch tax authorities.

Belgium

The DEMPE framework is embedded in Belgian Transfer Pricing practice for intangibles, with rules fundamentally aligned to the OECD arm’s length principle and Guidelines. This marks a shift away from reliance on legal title alone towards an analysis focused on functions performed, assets used, and, crucially, who exercises control over economically significant risks. The revised Belgian Master File requires a six-step DEMPE analysis, signalling a sustained emphasis by the tax authorities on transparency around IP and DEMPE-based value creation.

In practice, DEMPE is used extensively in audits and APA discussions as a pragmatic tool for pricing and remuneration of contributions to intangible value. It should however not be used as a mechanism for re-characterisation or systematic profit reallocation. Indeed, although frequently invoked in administrative practice, “economic ownership” is not a stand-alone legal category under Belgian law or the OECD Guidelines, and Belgian courts set a high evidentiary threshold for overriding legal ownership, stressing the importance of robust functional analysis and comparability to support any DEMPE-based TP adjustment.

Taxpayers should carefully document their IP transfer pricing policy, ensuring that pricing outcomes reflect actual contributions and risk control, supported by clear contemporaneous evidence.

Luxembourg

The interpretation and application of the DEMPE functions in Luxembourg highlight the growing importance of substance, functional analysis, and economic reality in Transfer Pricing assessments. While Luxembourg has historically been viewed as a favourable jurisdiction for IP structuring, recent case law-particularly at the EU level-underscores the need for a rigorous alignment between value creation and tax outcomes. Mere legal ownership of intangibles is insufficient; what matters is who actually performs, controls, and finances the development, enhancement, maintenance, protection, and exploitation of those assets. Going forward, both MNEs and tax authorities must ensure that DEMPE analyses are not only formally documented but also grounded in operational realities.

Any further questions or in need of assistance after reading these contributions? Please contact a member of our Transfer Pricing team or your trusted Loyens & Loeff adviser.

The full articles highlighted above were published in a special issue of the International Transfer Pricing Journal (International Transfer Pricing Journal, 2025 (Volume 32), No. 5a) and can be accessed through the IBFD Tax Research Platform or this link.