Small and mid-size multinational enterprises may decide to step away from using their own Dutch legal entities as conduits to generate income which internationally qualifies as ”royalty” in the sense of tax laws and tax treaties, due to the new Dutch substance and transfer pricing rules for such entities, in force as from 1/1/2006. See our Publications section (our chapter in the Euromoney Tax Handbook 2011) on what these new rules contain, including the potential audit effects. The new rules do not apply to our solutions because the new rules were written for Dutch conduit companies which are related to either the payor of their income, or the recipient, or to both. Using companies owned by Dutch residents implies that all transactions take place between completely unrelated parties, which eliminates a host of TP issues.