EU Transfer Pricing Reports

THE APPLICATION OF THE PROFIT SPLIT METHOD WITHIN THE EU (2019)

This paper addresses the first stage and aims at clarifying certain concepts in applying the PSM: (i) when to use the PSM (i.e. in which circumstances it may be considered the most appropriate transfer pricing method) and (ii) how to split the profit based on the concepts described in the revised OECD Guidelines as well as by providing an inventory of recurrent splitting factors. For the avoidance of doubt this report should be regarded as complementary to, and supportive of, the text of the OECD Revised Guidelines on the application of the Transactional Profit Split Method issued in June 2018. The paper is structured as follows: section 2 provides a short description of the profit split method; section 3 seeks to clarify some key concepts related to the use of the profit split method also touching upon some challenging points; and section 4 describes a number of potential splitting factors listed in the Annex ...

A COORDINATED APPROACH TO TRANSFER PRICING CONTROLS WITHIN THE EU (2018)

“Think international – act international – audit international“. Multinational enterprises (MNEs) primarily engage in cross-border activities and invest internationally while the competences of national tax jurisdictions remain limited to the national territory as a matter of principle. To face up to the challenges of globalisation and address the business models that have been developed to match the new economic realities, tax administrations need to strengthen their cooperation and be open to experiment with new forms of collaboration that deepen the exchange of information. In this context, a coordinated approach to transfer pricing controls would contribute to a better functioning of the internal market on two fronts: it would offer tax administrations a transparent and efficient tool to facilitate the allocation of taxing rights and also prevent the occurrence of double taxation and double non taxation. In the EU legal order there is a framework that provides Member States’ tax administrations with the tools for cross-border/administrative cooperation. It is important to use all available tools for administrative cooperation in the best possible way, including bi- and multilateral transfer pricing controls and to consider their improvement where necessary1. In the Report on Transfer Pricing Risk Management of the Joint Transfer Pricing Forum ...

Report on the Use of Comparables in the EU (2017)

In March 2017 the JTPF agreed the Report on the Use of Comparables in the EU. The report establishes best practices and pragmatic solutions by issuing various recommendations for both taxpayers and tax administrations in the EU and aims at increasing in practice the objectivity and transparency of comparable searches for transfer pricing. JTPF-comparables-October-2016 Related content: Nigeria vs Prime Plastichem Nigeria Limited, February 2020, Tax Appeal Tribunal, Case No TAT/LZ/CIT/015/2017 Prime Plastichem Nigeria Limited is a private limited company which engages in the business of trading in imported plastics and petrochemicals. Prime Plastichem Nigeria Limited had applied an internal CUP in determining the arm’s length price of its purchase of petrochemical products from its offshore related party, Vinmar Overseas Limited by comparing the controlled prices of products with the prices whereby the products were sold to third party customers. However, in 2014, Vinmar Overseas Limited... Netherland vs. A BV, October 2017, Lower Court, case no 2017: 5965 A Dutch parent company was providing support services to its foreign subsidiary on a cost-plus basis and received a compensation fee following a business restructuring where headquarter and strategic functions was transferred from the Dutch parent company to Switzerland. The Dutch tax authorities ...

EU REPORT ON THE USE OF COMPARABLES IN THE EU (2016)

EU REPORT ON THE USE OF COMPARABLES IN THE EU Background The EU Joint Transfer Pricing Forum (JTPF), as part of its work programme for 2015- 2019 (“Tools for the rules”), addresses the use of comparables in the EU (section 2.2 doc. JTPF/005/2015). Non-Governmental Members and Member States were asked to provide contributions as part of the preparation of the two meetings of 18 February 2016 and 23 June 2016. Those led to issuing two working documents (respectively, (doc. JTPF/009/2016/EN and JTPF/013/2016/EN) and were considered in the preparation of an overview on the current state of play, issues and possible solutions. A draft discussion paper on “Comparables in the EU” was prepared and discussed at the JTPF meeting in February 2016 (doc. JTPF/001/2016/EN). The present report also reflects the outcome of this discussion. Contents Background………………………………………………………………………………………………………………. 3 Introduction: context and scope……………………………………………………………………………….. 3 Comparable search…………………………………………………………………………………………………… 4 General aspects……………………………………………………………………………………………………. 4 Search strategy proposal………………………………………………………………………………………. 5 Specific aspects dealing with internal comparables……………………………………………………. 6 Selecting internal comparables……………………………………………………………………………… 6 Using internal comparables…………………………………………………………………………………… 7 Specific aspects dealing with external comparables……………………………………………………. 8 Sources of information in the EU……………………………………………………………………………. 8 Selecting external comparables……………………………………………………………………………… 9 Processing and interpreting external comparables……………………………………………….. 11 Specific aspects of comparability adjustments…………………………………………………………… 13 Observation in practice:………………………………………………………………………………………… 13 ...

EU Study on the Application of Economic Valuation Techniques (2016)

The Study on the Application of Economic Valuation Techniques for Determining Transfer Prices of Cross Border Transactions between Members of Multinational Enterprise Groups in the EU provides an overview on how valuation techniques can practically and most efficiently be used for transfer pricing purposes in the EU, particularly for transactions involving intangibles. It investigates the differences between valuations for transfer pricing purposes and valuations for other purposes, and the state of play in terms of experience gathered by EU Member States and trade partners ...

EU Report on Improving the Functioning of the Arbitration Convention (2015)

In April 2015 the Forum agreed on a Report on Improving the Functioning of the Arbitration Convention including a revised Code of Conduct for the effective implementation of the Arbitration Convention. The report and the revised Code of Conduct are the result of a monitoring exercise carried out by the JTPF and provide clarification inter alia on the following topics: Application of the AC in certain cases (absence of tax payment, changes in the status of the taxpayer) Transparency in cases when access to the AC is denied Implications of the new Article 7 OECD Model Tax Convention (2010) Functioning of the AC (e.g. as regards the 3 year period under Article 6 (1) AC) Serious penalties, tax collection and interest charges ...

Report on the Application of Economic Valuation Techniques (2017)

The Study on the Application of Economic Valuation Techniques for Determining Transfer Prices of Cross Border Transactions between Members of Multinational Enterprise Groups in the EU provides an overview on how valuation techniques can practically and most efficiently be used for transfer pricing purposes in the EU, particularly for transactions involving intangibles. It investigates the differences between valuations for transfer pricing purposes and valuations for other purposes, and the state of play in terms of experience gathered by EU Member States and trade partners ...