EN Official Journal of the European Union C 176/1

Resolution of the Council and of the representatives of the governments of the Member States, meeting within the Council, of 27 June 2006 on a code of conduct on transfer pricing documentation for associated enterprises in the European Union (EU TPD)

(2006/C 176/01)

THE COUNCIL OF THE EUROPEAN UNION AND THE REPRESENTATIVES OF THE GOVERNMENTS OF THE MEMBER STATES, MEETING WITHIN THE COUNCIL,

Having regard to the Commission's study entitled ‘Company Taxation in the Internal Market’ (1),

Having regard to the proposal made by the Commission, in its Communication of 23 October 2001 entitled ‘Towards an internal market without obstacles — A strategy for providing companies with a consolidated corporate tax base for their EU-wide activities (2)’, for the establishment of an EU Joint Transfer Pricing Forum,

Having regard to the Council conclusions of 11 March 2002 welcoming this move and the establishment of the Joint Transfer Pricing Forum in June 2002,

Considering that the internal market comprises an area without frontiers in which the free movement of goods, persons, services and capital is guaranteed,

Considering that in an internal market having the characteristics of a domestic market, transactions between associated enterprises from different Member States should not be subject to conditions less favourable than those applicable to the same transactions carried out between associated enterprises from the same Member State,

Considering that in the interest of the proper functioning of the internal market, it is of major importance to reduce the compliance costs as regards transfer pricing documentation for associated enterprises,

Considering that the Code of Conduct contained in this Resolution provides Member States and taxpayers with a valuable instrument for the implementation of standardised and partially centralised transfer pricing documentation in the European Union, with the aim of simplifying transfer pricing requirements for cross-border activities,

Considering that acceptance by Member States of standardised and partially centralised transfer pricing documentation to support transfer pricing on an arm's length basis could help businesses to benefit more from the internal market,

Considering that transfer pricing documentation in the European Union needs to be viewed in the framework of the OECD Transfer Pricing Guidelines,

Considering that standardised and partially centralised documentation should be implemented flexibly and should recognise the particular circumstances of the business concerned,

Considering that a Member State may decide not to have transfer pricing documentation rules at all or to require less transfer pricing documentation than that referred to in the Code of Conduct contained in this Resolution,

Acknowledging that a common approach in the European Union with respect to documentation requirements is beneficial both for taxpayers, in particular in terms of reducing compliance costs and exposure to documentation-related penalties, and for tax administrations owing to enhanced transparency and consistency,

Welcoming the Commission Communication of 7 November 2005 (3) on the work of the EU Joint Transfer Pricing Forum in the field of business taxation and on a Code of Conduct on transfer pricing documentation for associated enterprises in the European Union,

Emphasising that the Code of Conduct is a political commitment and does not affect the Member States' rights and obligations or the respective spheres of competence of the Member States and the Community resulting from the Treaty establishing the European Community,

Acknowledging that the implementation of the Code of Conduct contained in this Resolution should not hamper solutions at a more global level,

HEREBY AGREE TO THE FOLLOWING CODE OF CONDUCT:

Code of conduct on transfer pricing documentation for associated enterprises in the European Union (EU TPD)

Without prejudice to the respective spheres of competence of the Member States and the Community, this Code of Conduct concerns the implementation of standardised and partially centralised transfer pricing documentation for associated enterprises in the European Union. It is addressed to Member States but is also intended to encourage multinational enterprises to apply the EU TPD approach.

1. Member States will accept standardised and partially centralised transfer pricing documentation for associated enterprises in the European Union (EU TPD), as set out in the Annex, and consider it as a basic set of information for the assessment of a multinational enterprise group's transfer prices.

2. The use of the EU TPD will be optional for a multinational enterprise group.

3. Member States will apply similar considerations to documentation requirements for the attribution of profits to a permanent establishment as apply to transfer pricing documentation.

4. Member States will, wherever necessary, take duly into account and be guided by the general principles and requirements referred to in the Annex.

5. Member States undertake not to require smaller and less complex enterprises (including small and medium-sized enterprises) to produce the amount or complexity of documentation that might be expected from larger and more complex enterprises.

6. Member States should: (a) not impose unreasonable compliance costs or administrative burden on enterprises in requesting documentation to be created or obtained; (b) not request documentation that has no bearing on transactions under review; (c) ensure that there is no public disclosure of confidential information contained in documentation.

7. Member States should not impose a documentation-related penalty where taxpayers comply in good faith, in a reasonable manner and within a reasonable time with standardised and consistent documentation as described in the Annex or with a Member State's domestic documentation requirements, and apply their documentation properly to determine their arm's length transfer prices.

8. In order to ensure the even and effective application of this Code, Member States should report annually to the Commission on any measures they have taken further to this Code and its practical functioning.

(1) SEC(2001) 1681, 23.10.2001.

(2) COM(2001) 582 final, 23.10.2001.

(3) COM(2005) 543 final, 7.11.2005.