Onshore 2 Offshore

The proposal, which has been developed on the basis of work in the EU Joint Transfer Pricing Forum, 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.

Under the proposed Code of Conduct, 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:

One set of documentation (the "masterfile") should provide a “blue print” of the company and its transfer pricing system that would be relevant and available to all EU Member States concerned. It would provide information such as a general description of the business and business strategy, of the transactions involving associated enterprises in the EU and of the enterprise's transfer pricing policy.

Second, a set of standardised documentation ("country-specific documentation") for each of the specific Member States concerned with the intra-group transactions. This documentation would include information such as amounts of transaction flows within that country, contractual terms and the particular transfer pricing methods used and would only be available to the relevant Member State.

"This Code will ensure greater certainty and reduced compliance costs and risks of documentation-related penalties for multinationals" explained European Taxation and Customs Commissioner L?szl? Kov?cs, continuing:

"The EU Joint Transfer Pricing Forum is once again helping to remove cross-border tax problems and contributing to a competitive internal market."