de.mpg.escidoc.pubman.appbase.FacesBean
English
 
Help Guide Disclaimer Contact us Login
  Advanced SearchBrowse

Item

ITEM ACTIONSEXPORT

Released

Paper

Transfer Pricing, the Arm’s Length Standard and European Union Law

MPS-Authors
http://pubman.mpdl.mpg.de/cone/persons/resource/persons51250

Schön,  Wolfgang
Business and Tax Law, MPI for Tax Law and Public Finance, Max Planck Society;

Fulltext (public)
There are no public fulltexts available
Supplementary Material (public)
There is no public supplementary material available
Citation

Schön, W. (2011). Transfer Pricing, the Arm’s Length Standard and European Union Law. Working Paper of the Max Planck Institute for Tax Law and Public Finance, 2011-08.


Cite as: http://hdl.handle.net/11858/00-001M-0000-000F-47BD-A
Abstract
The European Court of Justice has confirmed the compatibility of transfer pricing adjustments under the arm’s length standard in its “SGI” judgment. In this decision, the ECJ has stated that transfer pricing control is justified as a means to fight “artificial arrangements” while commercially valid transactions have to be accepted by the tax authorities. This article shows that the economics of integrated business and the commercial purpose of transfer pricing (setting the right incentives for intra-firm services and supplies) justifies non-arm’s length transfer pricing in many situations. Against this background, the article proposes a new approach to international allocation of taxing rights: Any “rents” derived by a group company from transactions with other group companies shall be taxable in the latter’s country of residence by an extension of limited tax liability for foreign group companies.