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DRAFT REPORT (COM(2023)0529 – C90339/2023 – 2023/0322(CNS))

On the proposal for a Council directive on transfer pricing

ECON-PR-756000

Committee on Economic and Monetary Affairs · Rapporteur: Kira Marie PeterHansen

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Written by a language model from the full text only; every figure comes from the text. The paragraph links open the paragraph a statement rests on — check the text itself before relying on it.

The rapporteur's draft report approves the Commission's proposal for a Council directive on transfer pricing as amended. It aligns the directive with the latest OECD Transfer Pricing Guidelines, simplifies it, and adds a sunset clause phasing it out for BEFIT groups from 2035 and all multinational groups from 2040. The amendments delete several articles and definitions, including those on associated enterprises, transfer pricing methods, comparability analysis and the arm's length range. They add new provisions on downward adjustments, OECD guidelines consistency, safe harbours and Parliament's observer role in OECD negotiations. The report shortens the deadline for Member States to adopt and publish implementing laws to 31 December 2024 and to apply them from 1 January 2025. It also shortens the Commission's evaluation cycle to every 3 years, with the first report by 31 December 2029.

Committee position. The rapporteur proposes to approve the Commission proposal as amended, simplifying the directive and aligning it with the latest OECD Transfer Pricing Guidelines. The rapporteur supports a stronger role for the Commission and Parliament, and includes a sunset clause phasing out the directive for BEFIT groups from 2035 and all multinational groups from 2040.

Key points

  1. Parliament approves the Commission proposal as amended and calls on the Commission to alter its proposal accordingly under Article 293(2) TFEU.
  2. The arm's length principle should be applied consistently with the latest OECD Transfer Pricing Guidelines by Member States and taxpayers.
  3. The directive aims to ensure a better coordinated application of the arm's length principle, increasing tax certainty and reducing double non-taxation and double taxation.
  4. Member States should not grant corresponding adjustments in specified cases, and may perform downward adjustments only under conditions including no double non-taxation and communication to the relevant jurisdiction.
  5. The directive should not express a preference for any recognised transfer pricing method; the most appropriate method from the OECD Transfer Pricing Guidelines should be chosen.
  6. The Council may lay down further rules, including safe harbours, to simplify the arm's length principle and ensure tax certainty, by means of implementing acts based on a Commission proposal.
  7. The directive should cease to apply from 1 January 2035 for BEFIT groups and from 1 January 2040 for all MNE groups operating in the Union, except for transactions with associated enterprises in third countries.
  8. The Commission shall evaluate the directive every 3 years, with the first report by 31 December 2029, and Member States shall communicate relevant information to the Commission.
  9. Information communicated by Member States may be transmitted to other Member States and the European Parliament, subject to official secrecy.
  10. Personal data shall be retained no longer than 10 years as of the moment when personal data are processed for the purposes specified in the directive.
  11. The European Parliament may attend as observer the negotiations on the OECD Transfer Pricing Guidelines in relevant OECD working parties and at the OECD Inclusive Framework.
  12. Member States shall adopt and publish implementing laws by 31 December 2024 and apply them from 1 January 2025.

Who is affected

  • Member States, which must apply the arm's length principle consistently with OECD guidelines and adopt implementing laws by 31 December 2024.
  • Taxpayers and multinational enterprise groups, who benefit from safe harbours and face the directive's phase-out from 2035/2040.
  • The Council, which may adopt further rules and implementing acts on transfer pricing.
  • The Commission, which must evaluate the directive every 3 years and may propose implementing acts.
  • The European Parliament, which may attend OECD negotiations as an observer and receive information.

Figures and deadlines

  • 31 December 2024: deadline for Member States to adopt and publish implementing laws.
  • 1 January 2025: date from which Member States shall apply the implementing provisions.
  • 31 December 2029: deadline for the Commission's first evaluation report.
  • 1 January 2035: date the directive ceases to apply for BEFIT groups.
  • 1 January 2040: date the directive ceases to apply for all MNE groups operating in the Union.
  • 10 years: maximum retention period for personal data.
  • 3 years: frequency of the Commission's evaluation of the directive.

Legal basis: Article 115 of the Treaty on the Functioning of the European Union