Transfer Pricing and Financial Transactions

S. VPreface

In previous years, issues related to transfer pricing and intra-group financing are prominent in the agendas of both taxpayers and governments. The relevance of these issues is due to numerous factors. The first is the fact that money is a highly movable asset that can often be shifted around the world without significant effort. Second, the complexity of these issues requires comprehensive knowledge not only of the applicable tax codes but also of corporate finance, corporate law, and other subjects. The third is the debt-equity conundrum that has historically generated important discussions among tax experts. Consequently, according to the outcomes of a recent study, approximately 40% of MNEs have indicated transfer pricing issues related to intra-group financing as the most relevant issue in tax controversies.

The extreme relevance of these topics and the need to address them has attracted the interest of various international organizations for a long time. Already in 1972, the OECD Committee on Fiscal Affairs emphasized that these topics required further attention. As a result, the 1979 OECD Transfer Pricing Report dedicated an entire chapter to issues concerning loans an...