Brussels, 27 June 2006
Company taxation: The European Commission welcomes the adoption by the Council of a Code of Conduct on transfer pricing documentation
The Code of Conduct will standardise the documentation that companies must provide to tax authorities on their pricing of cross-border intra-group transactions ("transfer pricing" documentation). It will reduce significantly the tax complications that companies face when trading with associated enterprises in other Member States and, at the same time, facilitate the work of tax administrations by increased transparency regarding the group's transfer prices. It should also reduce the risk for businesses of double taxation and exposure to documentation related penalties. The Code is a political commitment but will not affect the Member States' rights and obligations or the respective spheres of competence of the Member States and the European Union. Member States have now to implement the Code as soon as possible in their legislation or administrative practices.
"I am very pleased that Member States have adopted this Code of Conduct that will ensure greater certainty and reduced compliance costs and risks of documentation-related penalties for multinationals" said Taxation Commissioner Lázló Kovács. "I now urge Member States to implement the Code as soon as possible in their national legislation or administrative practices".
The Code is based on a Commission proposal of November 2005 (see IP/05/1403
arising from the work of the EU Joint Transfer Pricing Forum (see IP/02/1105)
For further information on the work of the EU Joint Transfer Pricing Forum