2023/0322(CNS) | [ParlTrack]

Proposal for a directive
Recital 22

(22) Since the objective of this Directive cannot sufficiently be achieved by the Member States but can rather, by reason of the cross-border nature of the transfer pricing rules and the need to reduce compliance costs in the internal market as a whole, be better achieved at Union level, the Union may adopt measures, in accordance withIn accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve the objective of eliminating the pri~~nciple of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out~~ sk of double taxation and increasing tax certainty by reducing th~~at Article, this Directive does not go beyond what is necessary in order to achieve that objective~~e number of international transfer pricing tax disputes.

Amendment 101 #

Proposal for a directive
Article 1 – paragraph 1

This Directive lays down rules to harmonise transfer pricing rules of Member States and to ensure a common application of the arm’s length principle within the Union with the aim of presenting a simplification of administrative processes for SMEs and reducing red tape for them.

Amendment 102 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 1 – paragraph 1

This Directive lays down rules to ~~harmonis~~coordinate transfer pricing rules of Member States and to ensure a common application of the arm’s length principle within the Union.

Amendment 103 #

Proposal for a directive
Article 3 – paragraph 1 – point 1

(1) ‘arm’s length principle’ means the international standard pursuant to Article 9 of the OECD Model Tax Convention that prescribes that associated enterprises must transact with each other as if they were independent third parties. In other words, the transactions between two associated enterprises should reflect the outcome that would have been achieved if the parties were not related i.e. if the parties were independent of each other and the outcome (price or margins) was determined by (open) market forces.

Amendment 104 #

Proposal for a directive
Article 3 – paragraph 1 – point 1

(1) ‘arm’s length principle’ means the international standard as defined in the OSCE Guidelines that prescribes that associated enterprises must transact with each other as if they were independent third parties. In other words, the transactions between two associated enterprises should reflect the outcome that would have been achieved if the parties were not related i.e. if the parties were independent of each other and the outcome (price or margins) was determined by (open) market forces.

Amendment 105 #

Proposal for a directive
Article 3 – paragraph 1 – point 1

~~(1) ‘~~1. 'arm’s length principle’' means the international standard that prescribes that associated enterprises must transact with each other as if they were independent third parties. In other words, the transactions between two associated enterprises should reflect the outcome that would have been achieved if the parties were not related i.e. if the parties were independent of each other and the outcome (price or margins) was determined by (open) market forces.

Amendment 106 #

Proposal for a directive
Article 3 – paragraph 1 – point 4

(4) ‘permanent establishment’ means a fixed place of business, as defined under the relevant bilateral convention on the avoidance of double taxation or, in absence thereof, in national law in line with Article 5 of the OECD Model Tax Convention;

Amendment 107 #

Proposal for a directive
Article 3 – paragraph 1 – point 9

(9) ‘comparable uncontrolled price method’ means a transfer pricing method that compares the price for property or services transferred in a controlled transaction to the price charged for property or services transferred in a comparable uncontrolled transaction in comparable circumstances;deleted

Amendment 108 #

Proposal for a directive
Article 3 – paragraph 1 – point 10

(10) ‘resale price method’ means a transfer pricing method based on the price at which a product that has been purchased from an associated enterprise is resold to an independent enterprise; the resale price being reduced by the resale price margin and the result, after subtracting the resale price margin, can be regarded, after adjustment for other costs associated with the purchase of the product, e.g. custom duties, as an arm’s length price of the original transfer of property between the associated enterprises;deleted

Amendment 109 #

Proposal for a directive
Article 3 – paragraph 1 – point 11

(11) ‘cost plus method’ means a transfer pricing method using the costs incurred by the supplier of property (or services) in a controlled transaction; an appropriate mark-up is added to these costs, to make an appropriate profit in light of the functions performed (taking into account assets used and risks assumed) and the market conditions; the price, after adding the mark-up to the proper cost base, may be regarded as an arm’s length price of the original controlled transaction;deleted

Amendment 110 #

Proposal for a directive
Article 3 – paragraph 1 – point 12

(12) ‘transactional net margin method’ means a transactional profit method that examines the net profit margin relative to an appropriate base, e.g. costs, sales, assets, that a taxpayer realises from a controlled transaction that it is appropriate to aggregate;deleted

Amendment 111 #

Proposal for a directive
Article 3 – paragraph 1 – point 13

(13) ‘profit split method’ means a transactional profit split method that shows the relevant profits to be split for the associated enterprises from a controlled transaction (or controlled transactions that it is appropriate to aggregate) and then divides those profits between the associated enterprises on an economically valid basis that approximates the division of profits that would have been agreed at arm’s length;deleted

Amendment 112 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 3 – paragraph 1 – point 18

(18) ‘OECD Transfer Pricing Guidelines’ means the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2022, endorsed by the OECD Council pursuant to the OECD Council Recommendation of the Council on the Determination of Transfer Pricing between Associated Enterprises [C(95)126/Final], and as amended in January 20, 2022 and included in Annex I~~, and~~; The Commission shall be empowered to adopt delegated acts, in accordance with Article 18, in order to incorporate any further amendments tof these OECD Transfer Pricing Guidelines ~~that the Union approved in the context of the OECD Committee on Fiscal Affairs via the adoption of a Union position under 218(9) TFEU~~into this Directive;

Amendment 113 #

Proposal for a directive
Article 4 – paragraph 1

1. Member States shall ensure that, where an enterprise engages in one or more commercial or financial cross-border transactions with an associated enterprise, such enterprise determines the amount of its taxable profits in a manner that is consistent with the arm’s length principle and the OECD Guidelines.

Amendment 114 #

Proposal for a directive
Article 4 – paragraph 1

1. Member States shall ensure that, where an enterprise engages in one or more commercial or financial cross-border ~~transac~~relations with an associated enterprise, such enterprise determines the amount of its taxable profits in a manner that is consistent with the arm’s length principle.

Amendment 115 #

Proposal for a directive
Article 5 – paragraph 1 – point a

~~(a) a person participates in the management of another person by being in a position to exercise a significant influence over ethe other person;~~deleted

Amendment 116 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 5 – paragraph 1 – point a

(a) a person participates in the management of another person by being in a position to exercise a significant influence over ethe other person;

Amendment 117 #

Proposal for a directive
Article 5 – paragraph 1 – point a

(a) a person participates in the management of another person by being in a position to exercise a ~~significant~~n influence over ethe other person;

Amendment 118 #

Proposal for a directive
Article 5 – paragraph 1 – point b

(b) a person participates in the control of another person through a holding that exceeds 2533 % of the voting rights;

Amendment 119 #

Proposal for a directive
Article 5 – paragraph 1 – point b

(b) a person participates in the control of another person through a holding that exceeds 250 % of the voting rights;

Amendment 120 #

Proposal for a directive
Article 5 – paragraph 1 – point b

(b) a person participates in the control of another person through a holding that exceeds 25 % of the voting rights;

Amendment 121 #

Proposal for a directive
Article 5 – paragraph 1 – point c

(c) a person participates in the capital of another person through a right of ownership that, directly or indirectly, exceeds 250 % of the capital;

Amendment 122 #

Proposal for a directive
Article 5 – paragraph 1 – point c

(c) a person participates in the capital of another person through a right of ownership that, directly or indirectly, exceeds 25 % of the capital;

Amendment 123 #

Proposal for a directive
Article 5 – paragraph 1 – point c

(c) a person participates in the capital of another person through a right of ownership that, directly or indirectly, exceeds 25 33% of the capital;

Amendment 124 #

Proposal for a directive
Article 5 – paragraph 1 – point d

(d) a person is entitled to 2533 % or more of the profits of another person.

Amendment 125 #

Proposal for a directive
Article 5 – paragraph 1 – point d

(d) a person is entitled to 250 % or more of the profits of another person.

Amendment 126 #

Proposal for a directive
Article 5 – paragraph 1 – point d

(d) a person is entitled to 25 % or more of the profits of another person.

Amendment 127 #

Proposal for a directive
Article 6 – paragraph 1 – point b

(b) the primary adjustment results in the taxation of an amount of profits in another jurisdiction on which the associated enterprise in the Member State that was requested to perform the corresponding adjustment has already been subject to ~~tax~~a minimum effective level of taxation in line with the Directive (EU) 2022/2523 in such Member State;

Amendment 128 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 6 – paragraph 3 – point a – point i

(i) indicate all factual and legal circumstances necessary to evaluate, under the arm’s length principle, the primary adjustment performed in the other jurisdiction, including relevant transfer pricing documentation communicated to the different Member States;

Amendment 129 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 6 – paragraph 3 – point a – point ii a (new)

(ii a) communicate, for each Member States concerned by the adjustment, the effective tax rate calculated within the meaning of Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union;

Amendment 130 #

Proposal for a directive
Article 6 – paragraph 3 – point b

(b) Member States shall declare the request admissible within 30 days by virtue of a notification to the taxpayer if all the information provided in paragraph 3, point (a), has been submitted. In the same timeframe, Member States shall notify the taxpayer of the lack of any necessary information and grant at least 30 days to provide it. If the taxpayer does not provide the requested information within the assigned deadline, the request ~~may~~should be rejected as inadmissible.

Amendment 131 #

Proposal for a directive
Article 6 – paragraph 3 – point b

(b) Member States shall declare the request admissible within 340 days by virtue of a notification to the taxpayer if all the information provided in paragraph 3, point (a), has been submitted. In the same timeframe, Member States shall notify the taxpayer of the lack of any necessary information and grant at least 340 days to provide it. If the taxpayer does not provide the requested information within the assigned deadline, the request may be rejected as inadmissible.

Amendment 132 #

Proposal for a directive
Article 6 – paragraph 3 – point b

(b) Member States shall declare the request admissible within 30 days by virtue of a notification to the taxpayer if all the information provided in paragraph 3, point (a), has been submitted. In the same timeframe, Member States shall notify the taxpayer of the lack of any necessary information and grant at least 360 days to provide it. If the taxpayer does not provide the requested information within the assigned deadline, the request may be rejected as inadmissible.

Amendment 133 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 6 – paragraph 3 – point c

(c) Member States shall ensure that when the double taxation arises from a primary adjustment made in another Member State, the procedure is concluded within 180 days from the receipt of the taxpayer’s request with a reasoned act of acceptance or rejection. The procedure can be extended once by a reasonable period of time if the tax payer and the involved Member States all agree to such extension.

Amendment 134 #

Proposal for a directive
Article 6 – paragraph 3 – point c

(c) Member States shall ensure that when the double taxation arises from a primary adjustment made in another Member State, the procedure is concluded within 180 days from the receipt of the taxpayer’s request with a reasoned act of acceptance or rejection. This deadline shall be binding on the tax authorities.

Amendment 135 #

Proposal for a directive
Article 6 – paragraph 3 – point c

(c) Member States shall ensure that when the double taxation arises from a primary adjustment made in another Member State, the procedure is concluded within 18200 days from the receipt of the taxpayer’s request with a reasoned act of acceptance or rejection.

Amendment 136 #

Gilles BOYER, Olivier CHASTEL, Martin HLAVÁČEK

Proposal for a directive
Article 6 – paragraph 3 – point d

(d) In the case of acceptance, Member States shall communicate immediately to the tax authority of the other relevant jurisdiction the recognition of the corresponding adjustment.

Amendment 137 #

Proposal for a directive
Article 6 – paragraph 3 a (new)

3 a. For the purpose of paragraphs 1, 2 and 3, Member States should use all the available procedures and arrangements provided by the Directive on Administrative Cooperation (DAC).

Amendment 138 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 6 – paragraph 5 – point a a (new)

(a a) the downward adjustment is not leading to double non taxation, the Member State performing the downward adjustment needs to receive assurances that the downward adjustment is included in the profits of the associated enterprise in the other jurisdiction and taxed;

Amendment 139 #

Proposal for a directive
Article 6 – paragraph 5 – point a a (new)

(a a) the downward adjustment is not leading to double non-taxation and the Member State performing it can attest it is included in the taxable profits of the associated enterprise in the other jurisdiction;

Amendment 140 #

Proposal for a directive
Article 7 – paragraph 1 – point a

(a) before recording the relevant transaction, or series of transactions, the taxpayer made ~~reasonable efforts~~everything possible to achieve an arm's length outcome;

Amendment 141 #

Proposal for a directive
Article 9

1. Member States shall ensure that the arm's length price charged in a controlled transaction between associated enterprises is determined using one of the following transfer pricing methods: (a) the comparable uncontrolled price method; (b) the resale price method; (c) the cost-plus method; (d) the transactional net margin method; (e) the profit split method. 2. In addition to those methods listed in paragraph 1, Member States shall allow for the application of any other valuation methods and techniques to estimate the arm’s length price only if it can be demonstrated in a satisfactory manner that: (a) none of the methods referred to in paragraph 1 is appropriate or workable in the circumstances of the case; (b) the selected valuation method or technique is consistent with the arm’s length principle and provides a more reliable estimate of the arm’s length result than the methods listed in paragraph 1.Article 9 deleted Transfer pricing methods

Amendment 142 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 9 – paragraph 1 – introductory part

1. Member States shall ensure that the arm's length price charged in a controlled transaction between associated enterprises is determined only using one of the following transfer pricing methods:

Amendment 143 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

2. In addition to those methods listed in paragraph 1, Member States shall allow for the application of any other valuation methods and techniques to estimate the arm’s length price only if it can be demonstrated in a satisfactory manner that: (a) none of the methods referred to in paragraph 1 is appropriate or workable in the circumstances of the case; (b) the selected valuation method or technique is consistent with the arm’s length principle and provides a more reliable estimate of the arm’s length result than the methods listed in paragraph 1.deleted

Amendment 144 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 9 – paragraph 2 – point a

~~(a) none of the methods referred to in paragraph 1 is appropriate or workable in the circumstances of the case;~~deleted

Amendment 145 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 9 – paragraph 2 – point b

(b) the selected valuation method or technique is consistent with the arm’s length principle and provides a more reliable estimate of the arm’s length result than the methods listed in paragraph 1.deleted

Amendment 146 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 9 – paragraph 2 – point b

Amendment 147 #

Paul TANG

Proposal for a directive
Article 9 a (new)

Article 9a Amendments to Directive 2011/16/EU 1. Directive 2011/16/EUArticle 8a (6), point (h) is amended as follows: (i) the identification of the method used for determination of the transfer pricing or other valuation methods and techniques to estimate the arm’s lenght price as defined in Directive [2024/XX/XX on transfer pricing] Article 9 and the reasoning behind applying such method, or the transfer price itself in the case of an advance pricing arrangement;

Amendment 148 #

Proposal for a directive
Article 10 – paragraph 1

1. Member States shall ensure that the arm's length price is determined by applying the most appropriate transfer pricing method ~~to the circumstances of the~~for a particular case.

Amendment 149 #

Proposal for a directive
Article 10 – paragraph 2 – introductory part

2. The most appropriate transfer pricing method shall be selected from among the transfer pricing methods set out in ~~Article 9~~OECD Transfer Pricing Guideline, taking into consideration the following criteria:

Amendment 150 #

Proposal for a directive
Article 10 – paragraph 2 – point b

(b) the appropriateness of a transfer pricing method in view of the nature of the controlled transaction~~, determined in particular through an analysis of the functions undertaken by each enterprise in the controlled transaction, taking into account assets used and risks assumed~~;

Amendment 151 #

Proposal for a directive
Article 11 – paragraph 2 – point b

(b) the functions performed by each of the parties to the transaction, taking into account assets used and risks assumed, including how those functions relate to the wider generation of value by the MNE group to which the parties belong, the circumstances surrounding the transaction, and industry practices;deleted

Amendment 152 #

Proposal for a directive
Article 11 – paragraph 2 – point e

~~(e) the business strategies pursued by the parties.~~deleted

Amendment 153 #

Proposal for a directive
Article 11 – paragraph 3 – point a

(a) none of the differences (if any) between the transactions being compared or between the enterprises undertaking those transactions could materially affect the price or margin in the open market;

Amendment 154 #

Proposal for a directive
Article 12

Determination of the arm’s length range 1. Member States shall ensure that, when the application of the transfer pricing methods produces a range of values, the arm's length range is determined using the interquartile range of the results of the uncontrolled comparables. 2. The interquartile range is the range from the 25th to the 75th percentile of the results derived from the uncontrolled comparables. 3. Member States shall ensure that a taxpayer is not subject to adjustment if its results fall within the arm’s length range, unless it is proven that a specific different positioning in the range is justified by the facts and circumstances of the specific case. 4. Member Stats shall ensure that, if the results of a controlled transaction fall outside the arm's length range, an adjustment is made to the median of all the results unless it is proven that any other point of the range determines an arm’s length price taking into consideration the circumstances of the specific case. The median is the 50th percentile of the range of results of the comparable uncontrolled transactions.Article 12 deleted

Amendment 155 #

Proposal for a directive
Article 12 – paragraph 4 a (new)

4a. Owing to the fact that transfer pricing disputes often relate to points within the interquartile range or relative to benchmarks, this can lead to disputes about the facts and circumstances of particular transactions. Therefore, interquartile ranges will not reduce litigation. Contrary to what is being sought to be achieved, they may lead to more closed positions on facts and circumstances, diminishing flexibility in dispute resolution, in particular in relations with third countries.

Amendment 156 #

Proposal for a directive
Article 13 – paragraph 2

~~2. The Commission shall be empowered to adopt~~ delegated acts, in accordance with Article 18, in order to further supplement the rule referred to in paragraph 1 with regard to the documentation, by laying down common templates, setting linguistic requirements, defining the type of taxpayer to abide by these templates and the timeframes to be covered .

Amendment 157 #

Proposal for a directive
Article 13 a (new)

Article 13a Settlement of disputes 1. Owing to the potential increase in litigation, this Directive requires the introduction of fast-track mechanisms which can respond to all demands. The arbitration system needs to be quick so that agreements can be reached, thereby avoiding problems and disputes that may arise. The use of Advance Pricing Agreements (APAs) should therefore be encouraged to strengthen dispute prevention and resolution mechanisms in the European Union. This should involve allocating more resources to tax administrations to speed up the processing times for APAs, increasing legal certainty for EU companies. 2. The presence of accessible dispute resolution mechanisms is of vital importance for cross-border trade, thus ensuring tax certainty and eliminating double taxation for taxpayers. Strengthening the use of Mutual Agreement Procedures (MAPs) as outlined in the EU Arbitration Convention can speed up the resolution of cases within shorter timeframes. To this end, States are invited to allocate adequate resources so that deadlines are met and Mutual Agreement Procedures (MAPs) can become an effective tool to eliminate double taxation.

Amendment 158 #

Proposal for a directive
Article 13 b (new)

Article 13b Extension of the European Trust and Co- operation Approach (ETACA) initiative 1. It is necessary to broaden the focus and scope of the European Trust and Cooperation Approach (ETACA) to include transfer pricing reviews of specific intra-EU flows by participating Member States and not only low value- added transactions, as is currently the case. 2. Broadening the focus and scope will contribute to a more comprehensive and efficient approach to transfer pricing issues, with ex ante tax certainty that will eliminate subsequent tax disputes. States will thus need to agree on common definitions of the process and the main practical aspects. 3. It is recommended that a link be established between the ETACA and APAs to ensure the ETACA acts as a fast- track for finding stable solutions when problems arise during the review process.

Amendment 159 #

Proposal for a directive
Article 13 c (new)

Article 13c Re-establishment of the EU Joint Transfer Pricing Forum 1. The EU Joint Transfer Pricing Forum has offered practical solutions to the challenges posed by transfer pricing practices in all Member States. 2. The re-establishment of this forum with a broader mandate allows national experts from the Member States, together with representatives of the business community, to support the Commission, which may result in legislation capable of achieving the stated objective of increasing security for business in the European Union. A joint view of taxpayers and tax authorities provides a more comprehensive point of view when it comes to finding practical solutions.

Amendment 160 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 1

1. Member States shall include in the national rules transposing the transfer pricing rules laid down in Chapter II of this Directive provisions that ensure that those transfer pricing rules are applied in a manner consistent with the ~~OECD Transfer Pricing Guidelines.~~ latest internationally recommended Transfer Pricing Guidelines, from either the OECD or the United Nations.

Amendment 161 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 1 – point 1 (new)

(1) Member States shall ensure that transfer pricing rules are applied in a manner consistent with the latest internationally recommended Transfer Pricing Guidelines, from either the OECD or the United Nations.

Amendment 162 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 2 – introductory part

2. The Co~~uncil~~mmission may lay down further rules, consistent with the ~~OECD Transfer Pricing Guidelines~~the latest internationally recommended Transfer Pricing Guidelines, from either the OECD or the United Nations , on how the arm’s length principle and the other provisions laid down in Chapter II of this Directive are to be applied in specific transactions to ensure more tax certainty and mitigate the risk of double non taxation~~. Those specific transactions or dealings are the following:~~ and double taxation, and reduce tax diputes and tax abuse

Amendment 163 #

Proposal for a directive
Article 14 – paragraph 2 – introductory part

2. The Council may lay down further rules, consistent with the OECD Transfer Pricing Guidelines, on how the arm’s length principle and the other provisions laid down in Chapter II of this Directive are to be applied in specific transactions to ensure more tax certainty and mitigate the risk of double non-taxation~~. Those specific transactions or dealing~~ and double taxation, as well as are ~~the following:~~ducing tax disputes.

Amendment 164 #

Proposal for a directive
Article 14 – paragraph 2 – introductory part

2. The Co~~uncil may lay down further rul~~mmission may issue guidelines, consistent with the OECD Transfer Pricing Guidelines, on how the arm’s length principle and the other provisions laid down in Chapter II of this Directive are to be applied in specific transactions to ensure more tax certainty and mitigate the risk of double taxation. Those specific transactions or dealings are the following:

Amendment 165 #

Proposal for a directive
Article 14 – paragraph 2 – point a

~~(a) transfer of intangibles asset or rights in intangible assets between associated enterprises, including hard-to- value intangibles;~~deleted

Amendment 166 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 2 – point a

~~(a) transfer of intangibles asset or rights in intangible assets between associated enterprises, including hard-to- value intangibles;~~deleted

Amendment 167 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 2 – point b

~~(b) the provision of services between associated enterprises, including the provision of marketing and distribution services;~~deleted

Amendment 168 #

Proposal for a directive
Article 14 – paragraph 2 – point b

~~(b) the provision of services between associated enterprises, including the provision of marketing and distribution services;~~deleted

Amendment 169 #

Proposal for a directive
Article 14 – paragraph 2 – point c

~~(c) cost contribution arrangements between associated enterprises;~~deleted

Amendment 170 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 2 – point c

~~(c) cost contribution arrangements between associated enterprises;~~deleted

Amendment 171 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 2 – point d

~~(d) transactions between associated enterprises in the context of business restructurings;~~deleted

Amendment 172 #

Proposal for a directive
Article 14 – paragraph 2 – point d

~~(d) transactions between associated enterprises in the context of business restructurings;~~deleted

Amendment 173 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 2 – point e

~~(e) financial transactions;~~deleted

Amendment 174 #

Proposal for a directive
Article 14 – paragraph 2 – point e

~~(e) financial transactions;~~deleted

Amendment 175 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 2 – point f

~~(f) dealings between the head office and its permanent establishments.~~deleted

Amendment 176 #

Proposal for a directive
Article 14 – paragraph 2 – point f

~~(f) dealings between the head office and its permanent establishments.~~deleted

Amendment 177 #

Proposal for a directive
Article 14 – paragraph 3

~~3. The rules referred to in paragraphs 2 shall be taken by means of Council implementing acts based on a proposal from the Commission.~~deleted

Amendment 178 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 – paragraph 3

3. The rules referred to in paragraphs 2 shall be taken by means of Co~~uncil~~mmission implementing acts. Those implementing acts ~~bas~~shall be adopted oin a ~~proposal from the Commission~~ccordance with the examination procedure referred to in Article 17.

Amendment 179 #

Proposal for a directive
Article 14 – paragraph 3

3. The rules referred to in paragraphs 2 shall be taken by means of Council implementing acts based on a proposal from the Commission and until the period laid down in article 19a.

Amendment 180 #

Gilles BOYER, Olivier CHASTEL, Martin HLAVÁČEK

Proposal for a directive
Article 14 – paragraph 3

3. The rules referred to in paragraphs 2 shall be taken by means of Council ~~implementing~~delegated acts based on a proposal from the Commission.

Amendment 181 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 a (new)

Article14a 1. A 'European Forum on Transfer Pricing' (EFTP) is created and chaired by the Commission. The EFTP provides advice and assistance to the committee within the meaning of Article 17, notably to assess the need for adjustment to the present Directive with the objective of guaranteeing the continuous uniformity of transfer pricing methodologies within the EU and at global stage. 2. The EFTP is composed of representatives of Members States and a balance representation of tax payers, academics and civil society. The European Parliment is a member of the EFTP in quality of observer. The conditions for memberhip will be decided by the committee as referred to in Article 17.

Amendment 182 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 b (new)

Article14b new Scoping criteria 1. Member States shall subject the following activities, where these are performed through transactions between an enterprise and its associated enterprise, to a simplified approach to transfer pricing compliance: (a)distribution activity where it is performed through a low-risk distributor, as described in paragraph 2, who is resident for tax purposes or situated in the form of a permanent establishment in a Member State. (b)manufacturing activity where it is performed through a contract manufacturer, as described in paragraph 3, who is resident for tax purposes or situated in the form of a permanent establishment in a Member State. 2. For the purpose of applying paragraph 1, point (a), a low-risk distributor shall be an entity that performs distribution of goods purchased from associated enterprises. The activity of distribution shall display the following features: (a)it shall result from the accurate delineation of the transaction and exhibit economically relevant characteristics that can be reliably priced using a one-sided transfer pricing method, with the distributor being the tested party; (b)the distributor shall not hold the legal or economic co-ownership of the intellectual property contained in the products and/or services which are distributed; (c)the distribution activity shall be the predominant function performed by the distributor; (d) the distributor shall bear no or limited risks regarding market, inventory and bad credits. 3. For the purpose of applying point (b) of paragraph 1, a contract manufacturer shall be an associated enterprise which performs a manufacturing activity under the control of a principal and displays the following features: (a)the manufacturing activity, as resulting from the accurate delineation of the transaction, shall exhibit economically relevant characteristics that can be reliably priced using a one-sided transfer pricing method, with the manufacturing entity being the tested party; (b)the manufacturer shall not hold the legal or economic co-ownership of the intellectual property contained in the manufactured products; (c)the manufacturing activity shall be the predominant function performed by the manufacturer; (d)the manufacture shall bear no or limited risks regarding price, market, inventory, capacity utilization and bad credits. 4. Where an associated enterprise is engaged in more than one economic activity, it shall remain within the scope of the simplified approach, provided that any of the following conditions are met: (a)the economic activities other than distribution or manufacturing can be adequately segregated and separately priced; (b)the economic activities other than distribution or manufacturing can be considered ancillary and are either immaterial or do not add major value to distribution or manufacturing.

Amendment 183 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 c (new)

Article14c Compliance framework 1. Member States shall structure their risk assessment framework for the activities mentioned in Article 14b in such a way as to consist of three transfer pricing risk zones. 2. The risk zones shall be determined using the interquartile range of the profit performance resulting from the Union public benchmarks referred to in Article 14e. 3.The activities mentioned in Article 14b shall be risk assessed as being of low, medium or high risk, depending on how their profit performance in a given year, determined under Article 14d, compares to the interquartile range of the most recent set of public benchmarks prepared before the end of that year. 4. Member States shall apply the following risk framework: Risk zone Profit performance of the tested party relative to the EU profit markers low above 60TH percentile of the results of the public benchmark medium below 60TH percentile but above the 40TH percentile of the results of the public benchmark high below the 40TH percentile of the results of the public benchmark 5. Member States shall take the appropriate measures, in order to structure their approach to risk compliance in accordance with the following principles: (a) Low-risk zone: the competent authorities of the Member States may not dedicate additional compliance resources to further review the transfer pricing results. Notwithstanding this, the competent authorities of the Member States shall retain the right to perform transfer pricing adjustments of the profit margins of the taxpayer that falls within the low-risk zone. (b) Medium-risk zone: the competent authorities of the Member States may monitor the results, using available data, and contact the taxpayer, to seek a better understanding of its circumstances before deciding whether to allocate compliance resources to carrying out risk assessments and audits. (c) High-risk zone: the competent authorities of the Member States may recommend that the taxpayer reviews its transfer pricing policies and may decide to initiate a review or audit.

Amendment 184 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 d (new)

Article14d Measure of the performance 1.Member States shall lay down the appropriate legal framework, so that their competent authorities measure the profitability of the distribution activity mentioned in Article 14b (2) using Earnings Before Interest and Tax relative to sales as a profit level indicator. 2.Member States shall lay down the appropriate legal framework, so that their competent authorities measure the profitability of the manufacturing activity mentioned in Article 14 b(3) using Earnings before Interest and Tax relative to total costs as profit level indicator.

Amendment 185 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 14 e (new)

Article14e Public Benchmarks 1. The risk zone for the activities referred to in Article 14b shall be determined respectively via public benchmarks for distribution and manufacturing activities. 2. The public benchmarks for distribution activity shall be representative of the profit performance of independent entities operating in the internal market and performing predominantly distribution activity with similar characteristics to the activity described in Article 14 b (2). 3 .The public benchmark for manufacturing activity shall be representative of the profit performance of independent entities operating in the internal market and performing predominantly manufacturing activity with similar characteristics to the activity described in Article 14b (3). 4. The risk zone shall be determined using the interquartile range of the 5-year average profit performance of independent entities resulting from the public benchmarks. 5. The Commission shall, by means of implementing act laying down the necessary practical arrangements, set the search criteria to identify comparables for establishing the appropriate benchmarks for low-risk distribution and contract manufacturing activities. The results of the benchmarks shall be published on the Commission website, for the purpose of allowing taxpayers to determine the risk zone of their activities. The benchmarks shall be updated every 3 years. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 17.

Amendment 186 #

Proposal for a directive
Article 15 – paragraph 1

1. TEvery 5 years, the Commission shall examine and evaluate the application ~~of this Directive every 5 years and submit a report on its evaluation to the European Parliament and to the Council~~, the impact as well as the interplay of this Directive with the latest OECD guidelines and submit a report on its evaluation to the European Parliament and to the Council, and if appropriate, accompanied by a legislative proposal from the European Commission. The first report shall be submitted by 31 December 2031.

Amendment 187 #

Proposal for a directive
Article 15 – paragraph 1

1. The Commission shall examine and evaluate the application of this Directive every 5 years ~~and submit a report on its evaluation to the European Parliament and to the Council. The first report shall be submitted by 31 December 2031~~or after the adoption of updated OECD Guidelines on Transfer Pricing, whichever is earlier, and submit a report on its evaluation to the European Parliament.

Amendment 188 #

Proposal for a directive
Article 15 – paragraph 1

1. The Commission shall examine and evaluate the application of this Directive every 52 years and submit a report on its evaluation to the European Parliament and to the Council. The first report shall be submitted by 31 December 203128.

Amendment 189 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 15 – paragraph 1

1. The Commission shall examine and evaluate the application of this Directive every 53 years and submit a report on its evaluation to the European Parliament and to the Council. The first report shall be submitted by 31 December 203129.

Amendment 190 #

Proposal for a directive
Article 15 – paragraph 1 a (new)

1 a. The Commission shall review the application of this Directive for MNE groups that fall under the scope of the proposal for a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT), once that Directive is in force.

Amendment 191 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 15 – paragraph 2

2. Member States shall communicate to the Commission relevant information for the evaluation of this Directive with a view to improving the application of the arm’s length principle, to reducing double non taxation and double taxation as well as to combatting tax abuse and tax disputes, in accordance with paragraph 3.

Amendment 192 #

Proposal for a directive
Article 15 – paragraph 2

2. Member States shall communicate to the Commission relevant information for the evaluation of this Directive with a view to improving the application of the arm’s length principle, to reducing double non- taxation and double taxation, as well as to combatting tax abuse, in accordance with paragraph 3.

Amendment 193 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 16 – paragraph 2

2. Information, including personal data, processed in accordance with this Directive shall be retained only for as long as necessary to achieve the purposes of this Directive, in accordance with each data controller’s national law on statute of limitations, but in any case no longer than 105 years as of the moment when personal data are processed for the purposes specified in this Directive.

Amendment 194 #

Proposal for a directive
Article 16 – paragraph 2

Amendment 195 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 17 – paragraph 1

1. The Commission shall be assisted by a Committee. That committee shall be a committee within the meaning of Regulation (EU) No 182/2011438 . _________________ 38 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011laying down the rules and general principles concerning mechanisms for control by Member States ofthe Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13–18)

Amendment 196 #

Proposal for a directive
Article 18

1. The power to adopt the delegated act referred to in Article 13 shall be conferred on the Commission subject to the conditions laid down in this Article. 2. The delegation of power referred to in Article 13 may be revoked at any time by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of the delegated act if already in force. 3. Before adopting the delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Inter-institutional Agreement on better law making of 13 April 2016. 4. As soon as it adopts the delegated act, the Commission shall notify it to the Council. 5. The delegated act adopted pursuant to Article 13 shall enter into force without delay and shall apply as long as no objection is expressed by the Council. The Council may object to the delegated act within two months of the notification of that act. That period shall be extended by two months at the initiative of the Council. In such a case, the Commission shall repeal the act immediately following the notification of the decision to object by the Council.Article 18 deleted Exercise of delegation

Amendment 197 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 18 – paragraph 1

1. The power to adopt the delegated act referred to in Articles 13 (18) and shall be conferred on the Commission subject to the conditions laid down in this Article.

Amendment 198 #

Proposal for a directive
Article 18 – paragraph 2

2. The delegation of power referred to in Article 13 may be revoked at any time by the Council and the European Parliament. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of the delegated act if already in force.

Amendment 199 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 18 – paragraph 3

3. Before adopting the delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Inter-institutional Agreement on better law making of 13 April 2016. For the adoption of the delegated act referred to in Article 3(18), the European Forum on Transfer Pricing referred to in Article 14a serves as the relevant expert body.

Amendment 200 #

Proposal for a directive
Article 19 – paragraph 1

~~The European Parliament shall be informed by the Commission of the adoption of~~ delegated ~~acts, of any objection formulated to them, and of the revocation of the delegation of powers by the Council.~~

Amendment 201 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 19 – paragraph 1 a (new)

The European Parliament may attend as observer the international negotiations on Transfer Pricing Guidelines in the relevant international fora

Amendment 202 #

Proposal for a directive
Article 19 a (new)

Article 19a Sunset Clause 1. This Directive shall cease to apply as of 1 January 2030 for groups that fall under the scope of the proposal for a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT), except for the transactions with associated enterprises in third countries. 2. Paragraph 1 shall apply only if the proposal for a Council Directive on Business in Europe: Framework for Income Taxation (BEFIT) enters into force before 2030 and if it encompasses the following criteria: (a) accommodates a formulary apportionment based on relevant factors to assess where the economic activity is taking place; (b) does not allow for base erosion practices to take place; (c) covers a sufficiently broad definition of MNE group.

Amendment 203 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 19 a (new)

Article19a Sunset Clause This directive should cease to apply as of 2035 for BEFIT groups as defined in Article 2 of Directive (EU) XX/2024 (BEFIT Directive).

Amendment 204 #

Proposal for a directive
Article 20 – paragraph 1 – subparagraph 1

Member States shall adopt and publish, by [31 December 20254]at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

Amendment 205 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 20 – paragraph 1 – subparagraph 1

Amendment 206 #

Proposal for a directive
Article 20 – paragraph 1 – subparagraph 2

They shall apply those provisions from [1 January 20265].

Amendment 207 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Article 20 – paragraph 1 – subparagraph 2

They shall apply those provisions from [1 January 20265].

Amendment 208 #

Proposal for a directive
Annex I

~~OECD TRANSFER PRICING GUIDELINES OCED Transfer Pricing Guidelines~~deleted

Amendment 45 #

Proposal for a directive
Recital 2

(2) The globally recognised standard for determining the prices between associated enterprises for tax purpose is the so called “arm’s length principle”. The arm’s length principle prescribes that individual group members of a MNE must transact with each other as if they were independent third parties. In other words, the transactions between two associated enterprises should reflect the outcome that would have been achieved if the parties were not related i.e. if the parties were independent of each other and the outcome (price or margins) was determined by (open) market forces.

Amendment 46 #

René REPASI, Paul TANG, Jonás FERNÁNDEZ, Aurore LALUCQ, Evelyn REGNER

Proposal for a directive
Recital 2 a (new)

(2 a) Base erosion and profit shifting (BEPS) refers to tax planning strategies used by multinational enterprises that exploit gaps and mismatches in tax rules to avoid paying tax. Transfer pricing, while currently needed to determine where profits are reported, has also been misused for reducing the tax liabilities of firms in countries with higher tax rates leading to profit shifting. The arm’s length principle should be applied in Member States, and by taxpayers, in a manner that guarantees greater tax certainty for taxpayers and minimizes opportunities for profit shifting.

Amendment 47 #

Proposal for a directive
Recital 2 a (new)

(2 a) However, the “arm’s length principle” is based on the wrong assumption that MNE groups work as a collection of separate entities. This premise fails to acknowledge the global action of MNEs and how they benefit from their market power and economies of scale. Transfer pricing, thus, fails to respond to this reality and it is often used by MNEs to engage in profit-shifting. Artificially high prices for intra-group transactions allow to transfer profits from high to low-tax jurisdictions, reducing the total amount of taxes paid.

Amendment 48 #

Proposal for a directive
Recital 2 b (new)

(2 b) At the beginning of the BEPS project in 2013, OECD estimates, while acknowledging the methodological and data limitations, that the scale of global corporate income tax revenue losses due to BEPS practices (including transfer pricing manipulation) could be between USD 100 to 240 billion annually1a.The goal of this Directive is to collect at least part of this amount. _________________ 1a https://www.oecd.org/tax/beps-project- explanatory-statement-9789264263437- en.htm

Amendment 49 #

Proposal for a directive
Recital 2 c (new)

(2 c) The long-term solution to effectively address tax avoidance and guarantee a minimum level of effective taxation for MNE groups is a system of unitary taxation with formulary apportionment based on relevant factors to assess where economic activity is taking place. The main purpose of the directive ‘Business in Europe: Framework for Income Taxation’ (BEFIT) should be to create a consolidated tax base for economic groups, as well as implementing such a system.

Amendment 50 #