INTRODUCTION Contributed by: Paolo Ludovici, Luca Tortorella, Marlinda Gianfrate and Angelica Masciulli, Gatti Pavesi Bianchi Ludovici
cial transactions, intra-group services, intangibles and simplification measures (safe harbours); sector- specific transfer pricing guidance for the information and communication technology industry; and sup - plementary guidance on unilateral advance pricing agreements addressing implementation challenges in the context of developing countries. EU level On 21 October 2025, as part of the EU’s 2026 Work Programme, which focuses on strengthening EU sov - ereignty, competitiveness and resilience, the Europe - an Commission formally withdrew its Proposal for a Council Directive on transfer pricing. The proposal, presented in September 2023, was intended to har - monise key transfer pricing rules of member states and ensure a common approach to the arm’s length principle within the EU. The proposed directive sug - gested alignment to the latest OECD Guidelines and acknowledged the possibility that future guidelines may be issued by the UN. With the EU withdrawal from building a common transfer pricing framework, the spotlight returns to national legislation aligned with the OECD Transfer Pricing Guidelines. On the side of non-legislative initiatives, it is worth mentioning ETACA, a cross-border co-operative com - pliance programme, between tax administrations and MNE groups with global consolidated group revenue above EUR750 million, focused on transfer pricing risks. Covered transactions are intercompany trans - actions where one of the parties performs only limited functions and/or carries only limited risks and/or does not make unique and valuable contributions. These would include routine distribution activities, contract manufacturing activities and low value-adding intra- group services. Following the First Pilot Phase, EU member states, together with the European Commis - sion, have launched the Second Pilot, with 17 member states having expressed their willingness to partici - pate in the programme. VAT and transfer pricing in the EU As far as value added tax (VAT) is concerned, recent case law from the Court of Justice of the European Union has addressed the interaction between transfer pricing adjustment and VAT in Arcomet (ECJ C-726/23 – 4/09/2025).
The decisions concern whether year-end transfer pricing adjustments (eg, lump-sum payments made to align margins) should be treated as taxable trans - actions for VAT purposes or merely as financial flows. According to the EU court, a transfer pricing adjust - ment may qualify as a taxable transaction if the pay - ment is linked to identifiable intra-group services or supplies. In the same argument, Advocate General Kokott issued an Opinion in the Stellantis Portugal case (C-603/24 – 15/01/26), for which the judgment of the court is still pending. From a legislative perspective, in March 2025 the Council of the European Union adopted the “VAT in the Digital Age” (ViDA) package. This package provides that, where a transfer pricing adjustment is deemed relevant for VAT purposes, it can no longer be managed through a single, aggregate year-end debit or credit note, but it must be reflected in the digital records of the related transaction. Tax certainty and the transfer pricing framework: global statistics for MAPs and APAs On 31 October 2025, the OECD released its annual statistics on MAPs, including data on bilateral and multilateral APAs for 2024. These statistics monitor the implementation of Action 14 of the G20/OECD BEPS Project, which aims to verify the effectiveness of international tax dispute resolution mechanisms. The data covers 141 jurisdictions, providing a nearly complete representation of MAP cases worldwide. The APA statistics, derived from 49 jurisdictions, rep - resent additional efforts under Action 14. The global average MAP case closure time is 27.4 months (30.9 months for transfer pricing cases and 24.5 months for other cases). Trends show an increase in open and closed cases. The success rate for agree - ments concluded is 76%. In the absence of an arbi - tration clause, competent authorities are required to make efforts to eliminate double taxation, though there is no specific obligation concerning the results. Regarding APAs, according to the 2024 OECD APA statistics, 80 jurisdictions reported allowing bilateral
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