A Closer Look at the European Commission Proposal for Harmonized Rules for Transfer Pricing

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3 minutes read

The experts of our Transfer Pricing team and European Tax Law team wrote an article in the in the International Transfer Pricing Journal. They provide the background and objection of the EU TP Directive, and analyse the proposal and its position in respect of other international tax developments. They conclude that the TP Directive is expected to increase tax certainty for taxpayers across the EU, as the CJEU would become the court of highest instance for the application of the arm’s length principle. Unfortunately it will take substantial time to reach the increased certainty.

On 12 September 2023, the European Commission (EC) released legislative proposals for a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT) and a Council Directive that integrates key transfer pricing (TP) principles into EU law (the TP Directive). This article will analyse the proposed TP Directive, specifically in relation to the OECD Guidelines for Multinational Enterprises and Tax Administrations and EU law.

The article covers the following:

Section 1 gives a short introduction to the topic
Section 2 discusses the background of the TP Directive, including its reasons and objectives
Section 3 the authors analyse the proposed articles of the TP Directive
Section 4 includes the position of the TP Directive in respect of other tax developments
Section 5 covers the process of the TP Directive’s adoption
In section 6 the conclusions are provided.

Throughout this article, the authors have added their observations, where appropriate.

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A Closer Look at the European Commission Proposal for Harmonized Rules for Transfer Pricing

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Would you like to have more information on this TP Directive or analyse the impact it may have to your corporate tax situation, please contact one of us or your trusted adviser at Loyens & Loeff.