Insights

This article explains why TP adjustments matter for VAT and customs, explores the latest legal and practical developments, and outlines steps you can take to mitigate risk.

On the 12th of September 2023, the European Commission introduced the BEFIT initiative, also referred to as "the Proposal.". This initiative acknowledges the discretionary interpretations and implementations of the principle-based OECD Transfer Pricing Guidelines by Member States, resulting in tax uncertainty, escalated compliance costs, legal disputes, and associated fees. Together, these constitute a high risk for double and over-taxation for cross-border businesses and, therefore, act as a barrier within the Single Market. Accordingly, the Proposal aims to harmonize transfer pricing rules across EU Member States by incorporating the arm’s length principle into EU law.