Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on the work of the EU Joint Transfer Pricing Forum in the period July 2010 to June 2012 and related proposals

It is commonly accepted that increased globalization gives rise to practical problems for both multinational enterprises and tax administrations when pricing, for tax purposes, cross-border transactions between associated enterprises. The approach adopted by European Union Member States to correctly evaluate the price of such transactions is that of the arm's length principle (ALP). The ALP is based on a comparison between the conditions applied by associated enterprises and the conditions that would have applied between independent enterprises.

However, the interpretation and application of the ALP does vary between both tax administrations and tax administrations and business. This can result in uncertainty, increased costs and potential double taxation or even non taxation. These impact negatively on the smooth functioning of the internal market.

To address this, the EU Joint Transfer Pricing Forum (JTPF), an expert group, was set up by the Commission in October 2002, to find pragmatic solutions to problems arising from the application of the ALP, in particular within the EU. In 2011, the mandate of the JTPF was renewed and extended until 31 March 2015 by way of a Commission decision.

This Communication reports on the work of the JTPF for the period July 2010 to June 2012 and draws conclusions on the future work of the expert group.

Related proposals:
Appendix 1. Report on Small and Medium Enterprises and Transfer Pricing
Appendix 2. Report on Cost Contribution Arrangements on Services not creating Intangible Property (IP)

EUR-Lex: COM(2012)516: Follow the progress of this document through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2012:516:FIN

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