OECD Issues Revised Transfer Pricing Guidelines 

Impact for Ireland

On the 10th of July 2017, the OECD issued a cumulative update to the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration.

The update includes revised guidance on safe harbours adopted in 2013, as well as changes agreed to by OECD and G20 countries as part of the Base Erosion and Profit Shifting (“BEPS”) project.  This is the first full update of the guidelines since 2010.

The Significant Changes

The updated guidelines contain the substantial revisions introduced by the 2015 BEPS reports on Actions 8-10 (Aligning Transfer Pricing Outcomes with Value Creation) and Action 13 (Transfer Pricing Documentation and Country-by-Country Reporting). These amendments, which update the guidance in chapters I, II, V, VI, VII and VIII, were approved by the OECD Council and incorporated into the Transfer Pricing Guidelines in May 2016.

In addition, the updated guidelines include:

  • The revisions to Chapter IX to conform the guidance on business restructurings to the revisions introduced by the 2015 BEPS reports on Actions 8-10 and 13. These conforming changes were approved by the OECD Council in April 2017;
  • The revised guidance on safe harbours in Chapter IV. These changes were approved by the OECD Council in May 2013; and
  • Consistency changes that were required in the rest of the Transfer Pricing Guidelines to produce the 2017 consolidated version of the guidelines. These consistency changes were approved by the OECD's Committee on Fiscal Affairs on 19 May 2017.

What is not included in the new update of the guidelines is the long awaited new chapter on financing transactions.  The OECD Working Party Six is responsible for drafting these guidelines and it is now expected that a discussion draft will be issued later in the Summer or Autumn and will contain guidance on intercompany loans, guarantees, cash pooling and reinsurance transactions.  The aim of the OECD is to finalise this guidance by the end of 2017.

Impact for Ireland

Ireland’s transfer pricing laws are contained in Part 35A of the Taxes Consolidation Act of 1997 (“TCA 1997”).  The law specifically refers to the 2010 version of the Transfer Pricing Guidelines.  In 2015, legislation to introduce the Country-By-Country Reporting (“CbCR”) aspects of Action 13 were enacted.  However, the remaining changes arising from the BEPS projects in Action 13 and Action 8-10 were not formally legislated for.

It is expected that the legislative changes later in 2017 will contain provisions to update Ireland’s domestic transfer pricing law to align with the 2017 updated Transfer Pricing Guidelines.  Any changes are likely to be effective from 1 January 2018. 

In relation to Action 8-10, one of the main impacts for companies operating in Ireland will relate to how entitlement to intangible related returns are allocated amongst group members.  The amendments in the updated guidelines contain critical changes in relation to the allocation of risk and allocation of intangible-related profits. Legal allocation of risk under contract between related parties will be disregarded to the extent the allocation is not consistent with the actual conduct of the parties. What is key is who controls risk and who has the financial capacity to bear risk. In relation to the allocation of intangible-related returns, the new guidance differentiates between economic ownership and legal ownership of intangibles, the execution of value-creating development, enhancement, maintenance, protection and exploitation (“DEMPE” functions) and allocation of arm’s length remuneration thereto.

In relation to Action 13, the main impact for companies operating in Ireland will be the introduction of a two-tier transfer pricing documentation requirement – a Master File and Local File.  As mentioned previously, companies operating in Ireland will already be familiar with the other key pillar of Action 13 – CbCR requirements which are already included in Ireland’s domestic law.  The new two-tier transfer pricing documentation requirement has already been introduced in many other jurisdictions and Ireland’s transfer pricing documentation requirements are likely to be updated for the new changes in the forthcoming Finance Bill. Some of the key differences between current documentation requirements and Action 13 documentation requirements are that groups will be required to provide tax authorities with substantially more information on their global operations than in the past including specific information on intangibles, financing activities, the supply chain of key products/services and details of relevant tax rulings and APAs.

The increase in global transparency arising from the various changes to transfer pricing laws arising from BEPS and unilateral changes by many governments mean that multinational groups need to strive for more consistency and be aware that deviations from transfer pricing policies or implementation of new policies will become more apparent to tax authorities around the world.  New and updated systems to proactively monitor transfer pricing policies and outcomes will be required to adhere to the significant changes that have been introduced.  


Should you wish to discuss any transfer pricing related matters, please contact our Head of Transfer Pricing, Gerard Feeney at +353 1 417 2403 or

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