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EU: Status update on advance pricing arrangements

EU: Status update on advance pricing arrangements

In the years following the introduction of the Organisation for Economic Cooperation and Development (OECD) action plan on base erosion and profit shifting (BEPS), tax professionals have observed an increase in transfer pricing-related controversies and a related increase of advance pricing arrangement (APA) applications in various European countries.

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The increase in transfer pricing-related controversies was fueled by certain factors, including:

  • An increase in exchange of information between tax authorities
  • The number and qualification of tax auditors
  • The posture or position of tax authorities as well as their use of technology to identify transfer pricing risks and inconsistencies
  • The development of tax laws and regulations
  • Public pressure on governments to increase revenues generated from corporate income taxes
  • Tax authorities addressing tax evasion and aggressive tax avoidance through increased transparency

The importance of providing greater “tax certainty” to taxpayers to support their trade, investment, and economic growth remains an important focus area for both taxpayers and governments. At the same time, there have been challenges facing the European economy—including the debt crisis, Brexit, trade wars, and tariff discussions.

Against this background, there has been an increasing demand for legal and planning certainty by multinational entities. One consequence has been an increase in APA applications in European countries.

A report from KPMG analyzes these APA programs in Belgium, Denmark, Germany, Italy, the Netherlands, Poland, Portugal, Spain, Sweden, Switzerland, Ukraine, and the UK. Read the September 2019 report prepared by KPMG's Global Transfer Pricing Services group.

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