Transfer Pricing 2025

INTRODUCTION Contributed by: Paolo Ludovici, Marlinda Gianfrate, Luca Tortorella and Angelica Masciulli, Gatti Pavesi Bianchi Ludovici

whether to introduce the simplified approach in their tax systems starting from fiscal years com - mencing on or after 1 January 2025. Amount B can be implemented by jurisdictions according to two options: they can allow tax - payers to voluntarily adopt the simplified and streamlined approach (a safe harbour), or they can mandate its use for in-scope transactions. Currently, only a few countries (eg, the Nether - lands) have implemented Amount B into their domestic legislation, while the United States published a proposal for public consultation to incorporate the simplified and streamlined approach as an optional safe harbour, with the future possibility of making it mandatory for in- scope taxpayers. As a consequence, any outcome deriving from the application of the simplified and stream - lined approach is not (always) certain and can - not (always) be considered reliable for the pur - poses of a mutual agreement procedure (MAP), as amount B works on a level playing field only when all jurisdictions have applied the approach. The choice made by the Inclusive Framework in favour of a unilateral and elective approach seems to limit the effectiveness of the elimina - tion of double taxation. Given the current status, Amount B seems to be only partially effective, and the only tool at the taxpayer’s disposal to achieve tax certainty remains the bilateral and multilateral advanced pricing arrangements (APAs), which – albeit only for ongoing proce - dures and new applications – prevent double taxation even with application of the simplified approach. United Nations Level The Subcommittee on Transfer Pricing estab - lished by the United Nations Committee of

Experts on International Cooperation in Tax Mat - ters has been completing its mandate of devel - oping guidance in six workstreams: • transfer pricing during the COVID-19 eco - nomic downturn; • transfer pricing compliance assurance; • transfer pricing of carbon offsets and credits; • industry/sector guidance for agricultural products; • industry/sector guidance for the pharmaceuti - cal industry; and • dispute avoidance and resolution. The note - worthy guidance released addresses practi - cal challenges that developing countries are facing in the area of transfer pricing. Subcommittee participants have already identi - fied some elements for future workstreams on transfer pricing (intangibles and intragroup ser - vices) to be proposed to the next membership of the Committee. EU Level The most relevant initiatives at the EU level relate to the proposal for a Council Directive on transfer pricing and the implementation of the so-called public Country-by-Country Reporting (CbCR) Directive. Proposal for a Council Directive on transfer pricing In September 2023, the European Commission published a proposal to harmonise key trans - fer pricing rules of member states and ensure a common approach to the arm’s length’s principle within the EU. The proposed directive suggests alignment with the latest OECD guidelines and acknowledges the possibility that future guide - lines may be issued by the UN.

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