A Decade-Long Crusade against Transfer Pricing Rulings Turns into a Proposal for a Transfer Pricing Directive: A European Attempt to Introduce a Harmonized EU Arm’s Length Standard?

Abstract

The recent European Commission proposal for a transfer pricing directive comes after years of attempts to claim the existence of illegal State aids allegedly granted by Member States to multinational enterprises (MNEs) that were deemed to have been provided through advance pricing agreements. However, the Court of Justice of the European Union has consistently denied the Commission’s assumptions and clarified that no autonomous arm’s length principle, different from that of the OECD, was identifiable under EU law. In this article, the author analyses the major transfer pricing cases scrutinized by the European Commission and their connection to the Commission’s attempt to introduce a European arm’s length standard by reverting to the directive procedure after having failed to prove the existence of such a standard over a ten-year-long judicial battle.