On 3 August 2021, the OECD published several updates with respect to the transfer pricing country profiles. Next to certain profiles being updated, some new country profiles were added. In total, 20 country profiles were updated of which 3 new countries were added, bringing the total number of countries covered to 60. These country profiles include the current state of the countries’ domestic legislation regarding key transfer pricing principles as well as an indication to what extent these rules follow the OECD Transfer Pricing Guidelines. The updates include two new sections, now also covering the transfer pricing treatment of financial transactions and the application of the Authorised OECD Approach (AOA) to attribute profits to permanent establishments. Furthermore, the OECD indicated that updates to the transfer pricing country profiles will be conducted in batches throughout the second half of 2021 and the first half of 2022.

On 8 June 2021, the German tax authorities have published developments relating to transfer pricing regulations in the federal gazette (which are part of the so-called “Act to Modernise the Relief from Withholding Tax and the Certification of Capital Gains Tax”). One of the key points of the legislation includes amendments to the provisions on the arm's length principle under the Foreign Tax Act. With these updates, the German regulations become more aligned with the OECD Transfer Pricing Guidelines regarding specific topics. Furthermore, the updates may have an impact on existing transfer pricing documentation and the scope of intangibles. The updates relating to the arm's length principle will be applicable to income and corporation tax for tax assessment period 2022. More updates are expected at a later stage. Furthermore, we include some observations relating to transfer pricing audits in Germany.

Newsflash from our Dutch colleagues of Atlas (WTS Global member) on the proposal to disallow unilateral downward transfer pricing adjustments.

1. Introduction

On 18 December 2020, the OECD released its guidance on the transfer pricing implications of the COVID-19 pandemic (“the Paper”).¹ It represents the consensus view of the 137 members of the Inclusive Framework on BEPS.

Although we understand that the process of drafting such guidelines, and obtaining a consensus from all relevant member states takes time, the guidance was published rather late in 2020. For companies that closed prior to 31 December 2020, the guidance was hence not yet available.

Considering that, in our view, the OECD Transfer Pricing Guidelines (“OECD TPG) as such already provided sufficient guidance on how multinational groups should deal with transfer pricing in exceptional circumstances, the value of this additional guidance is rather limited to some useful confirmations, insights and illustrations. We, of course, understand that in these unprecedented times, an organization like the OECD wants to proactively provide guidance to taxpayers and tax administrations.

The OECD has released guidance on transfer pricing implications of the COVID-19 pandemic. This guidance represents the consensus view of the 137 members of the OECD/G20 Inclusive Framework on BEPS regarding the application of the arm’s length principle and the OECD Transfer Pricing Guidelines to issues that may arise or be exacerbated in the context of the COVID-19 pandemic.

Commenting on the OECD 'Blueprints' published on Monday 12 October, Koen Morbée, partner at Tiberghien Lawyers, and Andy Neuteleers, partner at Tiberghien Economics, urged the OECD Centre for Tax Policy and Administration, when continuing its work on both Pillars, to give due attention to some basic principles of law like the principle of reality, the principle of legal certainty and the principle of equality. Quoting from the memoires of Albert Tiberghien, the founding father of the firm Tiberghien, they also respectfully questioned the disproportionate complexity both Pillars will bring in the field of national and international taxation. In addition, they addressed the difficult co-existence of two competing international tax systems and the further undermining of the at arm’s length principle.

Tiberghien and Tiberghien economics work together on HR tax and transfer pricing, which are two distinct fiscally- and economically-inspired disciplines that have more interaction than is often realised at first sight and that affect both personal income tax and corporate income tax. This article clarifies the interaction between certain aspects of, on the one hand, the structuring of remuneration schemes for employees working in cross-border group set-ups and, on the other hand, the setting of transfer prices applied between group entities for the provision of services and the consequences that such setting-up might trigger in the future.

The OECD - OCDE released the latest mutual agreement procedure (MAP) statistics as part of the BEPS Action 14 minimum standard and the wider G20/OECD tax certainty agenda to improve the effectiveness and timeliness of tax-related dispute resolution mechanisms, covering 105 jurisdictions and almost all MAP cases worldwide.

The Belgian tax authorities have communicated that the online MyMinfin platform is not available due to technical reasons till the beginning of December 2020 to submit CBC-files (form 275CBC or CBCNOT).  

The deadline of the corporate income tax returns has been extended for the third time by the Minister of Finance, initially set 24 September 2020 (for companies with a financial year-end at 31 December 2019), first time extended to 29 October 2020, second time extended to 16 November 2020, with the new and final due date set 30 November 2020. As explained in our news update dd. 13 October 2020, this extension is granted in order to enable accounting firms to deal with the overload of work directly related to the exceptional circumstances caused by the covid-19 crisis and allow them  to submit the personal and corporate income tax returns in a (postponed) timely manner.