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An analysis by Atoz Tax advisers, Taxand Luxembourg
The European Commission has recently released a Directive Proposal on Transfer Pricing (TP), intending to integrate transfer pricing principles into EU law for consistent approaches among Member States.
Due to the lack of harmonised TP rules at EU level, Member States enjoy large discretion in interpreting the OECD TP Guidelines including for crucial concepts such as “associated enterprises”.
The Proposal addresses issues arising from the lack of harmonised transfer pricing rules, such as profit shifting, tax avoidance, litigation, and high compliance costs. It aims to incorporate the ‘arm’s length principle’ and essential transfer pricing rules into EU law, establish a fast-track procedure for resolving double taxation, clarify the role of OECD Transfer Pricing Guidelines, and allow the creation of common binding rules for specific transactions.
Oliver Hoor from our Luxembourg firm, Atoz Tax Advisers, analyses this proposal and its potential impact in more detail here.
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