Harmonising transfer pricing rules within the EU [EU Legislation in Progress]

Written by Pieter Baert (2nd edition, updated on 21.03.2024).

The pricing of goods and services traded within a multinational group is known as ‘transfer pricing’. The prices charged on such transactions affect the allocation of income among the different entities of the multinational group (and consequently, the taxable profits of each country). To ensure that transactions between group entities are priced in a way that reflects their fair market value – i.e. as if the transactions were made between independent entities – countries have put in place strict transfer pricing rules. While these rules are established at the national level, EU Member States generally align with the (non-binding) OECD Guidelines. However, the number of transfer pricing tax disputes has risen over the years, with both tax authorities and companies dedicating significant time and resources to resolving such cases.

On 12 September 2023, the European Commission tabled a proposal for harmonising transfer pricing rules within the EU. The main goal is to establish a common approach at the EU level towards transfer pricing and define key transfer pricing principles to be incorporated into EU law. The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has drawn up a (non-binding) report, which is expected to be put to the vote during Parliament’s April I plenary session (10-11 April).

Complete version

• March 2024: ‘Harmonising transfer pricing rules within the EU‘ (2nd edition)