Sélecteur de langues
Brussels, 10 November 2005
(see also MEMO/05/414)
The European Commission has adopted a proposal for a Code of Conduct that would standardise the documentation that multinationals must provide to tax authorities on their pricing of cross-border intra-group transactions ("transfer pricing" documentation). The proposal, that has been developed on the basis of work in the EU Joint Transfer Pricing Forum (see IP/02/1105), would reduce significantly the tax complications that companies face when trading with associated enterprises in other Member States. Companies frequently complain at present about the onerous and divergent documentation obligations with which they have to comply in such cases in the different Member States involved. The Code would be a political commitment and would not affect the Member States' rights and obligations or the respective spheres of competence of the Member States and the Community.
"This Code will ensure greater certainty and reduced compliance costs and risks of documentation-related penalties for multinationals" said European Taxation and Customs Commissioner László Kovács. "The EU Joint Transfer Pricing Forum is once again helping to remove cross-border tax problems and contributing to a competitive internal market."
The Commission proposal is for a Code of Conduct for new standardised and partially centralised "EU Transfer Pricing Documentation".
The documentation that multinational enterprises would have to file with tax administrations in order to report on their pricing for cross-border intra-group activities would consist of two main parts:
The EU Transfer Pricing Documentation should improve both the quality of the information provided by businesses and taxpayers' compliance with transfer pricing documentation requirements in EU Member States. It should thus reduce the risk for businesses of double taxation and exposure to documentation related penalties. At the same time it should lead to increased transparency regarding the group's transfer prices and thus facilitate the work of tax administrations.
The EU TPD would be optional for businesses. It would cover all group entities resident in the EU, including transactions between group entities resident in the EU and associated enterprises outside the EU.
The Code of Conduct is presented in the context of a Commission Communication on the work achieved by the EU Joint Transfer Pricing Forum in the field of business taxation from January 2004 to May 2005.
Member States are already operating another Code of Conduct that was
developed in the Forum (see IP/04/1447).
That first Code of Conduct ensures a more effective and uniform application by
EU Member States of the 1990 Arbitration Convention (90/436/EEC) that is
designed to deal with the double taxation that can arise in transfer pricing
The Commission Communication, the Forum's activity and the Code are available on the Europa website at:
For further information on the work of the EU Joint Transfer Pricing Forum see: