OECD: Possible VAT implications of Transfer Pricing

The Commission services wish to discuss with the VAT Committee the possible VAT implications of transfer pricing rules laid down for the purposes of direct taxation. Such rules are aimed at ensuring that the conditions of the transactions within a multinational enterprise group (“MNE group”), including the price, match comparable market conditions and that profits are fairly divided between the jurisdictions in which a multinational enterprise (“MNE”) operates1.

Hence, it is worth examining whether the application of such transfer pricing rules could have VAT implications for Member States, in an attempt to provide legal certainty for businesses and tax administrations.

The Organisation for Economic Co-operation and Development (OECD) and the G20 member countries have undertaken a project to tackle Base Erosion and Profit Shifting (BEPS project), which deals in part with some transfer pricing issues. However, it is outside the scope of this document to examine, in particular, the potential VAT implications of the BEPS project outcome.

Please find HERE the whole working paper of the European Commission published on 29th March 2017 and HERE the article “Transfer Price Adjustments – what you need to Consider from an Indirect Tax Perspective”.


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