top of page

Deloitte Partners Raise Concerns Over Effectiveness of European Commission's Transfer Pricing Directive

In response to the European Commission's proposed Transfer Pricing Directive, Deloitte partners Pablo Zalba and Nathalie Aymé have expressed concerns about its effectiveness. The directive, introduced in September with an intended implementation date of January 1, 2026, aims to incorporate the OECD Transfer Pricing Guidelines into EU law, creating a common framework for applying the arm's-length principle (ALP) and preventing double taxation for multinational entities.

Deloitte Partners Raise Concerns Over Effectiveness of European Commission's Transfer Pricing Directive

While Zalba and Aymé appreciate the directive's goal of simplifying tax rules and reducing compliance costs, they caution that the current features and scope may hinder its success. They specifically highlight the proposed reduction of Transfer Pricing (TP) disputes and the introduction of a 'fast-track' procedure for eliminating double taxation. However, they argue that the increasing complexity and lengthy resolution time of mutual agreement procedures (MAPs) accepted by the OECD might render the directive insufficient in achieving its objectives.

To enhance the directive's efficacy, Zalba and Aymé suggest adopting a straightforward dispute resolution procedure with mandatory deadlines for both taxpayers and tax administrations. They also advocate for greater legal certainty for taxpayers through reinforced advance pricing agreement programs and cooperative compliance programs. Despite supporting the Commission's effort to simplify tax rules, they caution against introducing new definitions that may add complexity.


The Deloitte partners express doubt about the need for additional EU-level documentation rules, asserting that the existing OECD Transfer Pricing Guidelines already provide detailed guidance. They call for immediate guidance on pan-EU standardized documentation, emphasizing the importance of simplifying compliance and reducing related costs.

Their concerns echo those of Kirsty Rockall, partner and head of TP at Grant Thornton UK, who agrees with the key messages in Zalba and Aymé's letter. Rockall highlights potential complexities arising from the proposed two-tier compliance system for multinational groups and questions the feasibility of implementing the directive without deviating from the arm's-length principle.

Andrew Hawley, corporate tax partner at Crowe UK, welcomes any proposal that aims to align and simplify tax rules across Europe. However, he emphasizes the need for careful consideration of interaction with other legislation, such as pillar two rules, to ensure the objectives of simplification and certainty for businesses are met. Hawley suggests that adopting a consistent approach across the EU could help simplify tax rules and reduce compliance costs.

Zalba and Aymé's intervention follows concerns raised by the European Tax Adviser Federation (ETAF), representing 215,000 regulated tax advisers, which warned that the proposed directive could increase the administrative burden for companies. The ETAF recommended staying close to OECD guidelines to avoid ambiguities, interpretation difficulties, and potential conflicts.



bottom of page