Through the Transfer Pricing Looking Glass – EU State Aid and Beyond …

This year’s WU TP Symposium Transfer Pricing Aspects of the Recent EU State Aid Cases in Vienna has taken a closer look at four tax planning cases that have had a major impact upon the development of the international tax regulatory landscape over the last decade and continue to do so.

With the benefit of hindsight, the cases of Amazon, Apple, Starbucks, and Fiat were analysed and discussed by four diverse tax/TP expert teams – comprising representatives of academia, advisory, fiscal authorities, and industry. ?The analysis followed the well-known four step process of applying the arm’s length principle according to OECD TP Guidelines, as taught in WU TP courses:

Step 1:???? Identification of the Commercial or Financial Relations

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Step 2:???? Recognition of the Accurately Delineated Transaction Undertaken

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Step 3:???? Selection of the Most Appropriate Transfer Pricing Method

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Step 4:???? Application of the Most Appropriate Transfer Pricing Method

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With respect to all tax cases considered in the Symposium - and explored jointly with a highly interested audience - the following general remarks apply:

Firstly, it is obvious that there is no uniform understanding, nor universally agreed definition what constitutes aggressive tax planning. ?Secondly, aggressive tax planning (whatever it is) is not illegal. ?And thirdly, the utilization of tax rate differences among countries by multinational companies in their cross-border intercompany transactions is often not tax motivated.

However, while tax competition among countries remains unchanged to date, despite the BEPS project and the two Pillar initiatives, times have greatly changed for multinational companies.

Tax policy makers and fiscal authorities in countries, the OECD, the EU Commission, the UN, and other stakeholders seem to compete in suggesting and defining appropriate ways and means to ensure an adequate taxation of the digital economy and financial transactions.

Undoubtedly, the four cases discussed have paved the way for steadily growing and nowadays much tighter tax transparency requirements for companies, thus setting an evolutionary developing framework for behavioural transfer pricing in the years to come. ?Therefore, it can safely be assumed that the establishment of tax planning structures like the ones discussed in the Symposium, which had been established roughly ten to twenty years ago, would not be possible anymore in the same manner today.

Thank you very much to Marcelo H. B. Moura , Abhishek Padwalkar , Ruth Mirembe , and Isabel Verlinden for their great preparation of the four cases for panel discussion.

Thanks a lot, to my fellow panelists ágata Uceda and Jér?me Monsenego (and supported by alain steichen ) for our insightful discussion of the Amazon Case. This has been a great learning experience for me!

Thank you very much to Raffaele Petruzzi for his excellent moderation of the WU TP Symposium. ?And thank you very much to Christina Sudrat and Mara Schmid for their tireless organisation to make this Symposium a success.

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