Community taxation on Transfer Pricing

March 21, 2022

The Council of the European Union proposes a new Directive, the DAC 7, through which the exchange of information, administrative cooperation, and transparency of the taxpayer before the tax authorities are promoted. In this regard, it introduces the figure of joint inspections in transfer pricing and other matters.

These inspections are carried out by two or more tax authorities of the Member States of the European Union, related to one or more persons of common interest for such States. In this way, the tax authorities will act in a coordinated manner.

This measure will benefit all parties involved, as it will reduce costs related to the initiation of administrative review procedures. Likewise, in the case of multinational companies operating in several countries, the closing of an inspection involving administrations of different States with an agreement, and which could potentially give rise to prior valuation agreements or other types of multilateral tax rulings, promotes legal certainty for the investment made by these companies in the different States.

Joint inspections will establish a new paradigm for Community taxation.

Source: Legal Today 18/03/22