Transfer Pricing 2026

Global Overview

International organisations and institutions have continued their efforts to standardise, harmonise and simplify transfer pricing principles and compliance. These developments have been seen in individual jurisdictions around the world, as evidenced by, among other things, the further progress made in addressing harmful tax practices and strengthening transparency in line with the BEPS Action 5 minimum standard and the efforts of a number of jurisdictions to update their transfer pricing country profiles (as detailed in the section below).

In general terms, however, interconnected geopolitical tensions (including the tariffs introduced by the US administration and the consequent counter-tariffs enacted by the EU, Canada and China) have impacted the global value chains and the transfer pricing policies, adding uncertainty and the risk of double taxation. The landscape also remains highly uncertain in light of the US Supreme Court’s ruling of 20 February 2026 which invalidated certain tariffs introduced by President Trump.

OECD level

At the OECD level, the most significant developments in 2025 related to the position adopted by the United States with respect to the OECD/G20 two-pillar solution on the taxation of multinational enterprises (MNEs).

Following the White House memorandum of 20 January 2025, the United States signalled that it did not intend to proceed with the implementation of the OECD “global tax deal”, effectively distancing itself from Pillar Two and the reallocation mechanism of Pillar One Amount A. Given that the multilateral convention required for the implementation of Amount A would primarily affect large US-headquartered multinational groups, the US position raises serious doubts about the practical viability of Pillar One.

The position taken by the United States may also have indirect implications for the practical implementation of Pillar One Amount B. Amount B simplifies the application of transfer pricing for baseline marketing and distribution activities. The final report was incorporated into the OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (the “Transfer Pricing Guidelines”), and jurisdictions are deciding whether to introduce the simplified approach in their tax systems starting from fiscal years commencing on or after 1 January 2025. Currently, the global implementation of Amount B is still fragmented: only a few countries (eg, the Netherlands) have implemented Amount B in their domestic legislation or are in the process of implementing it (eg, Singapore), while the United States has 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.

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 those already well-known and established instruments, such as bilateral and multilateral advance pricing agreements (APAs), which prevent double taxation even without the application of a simplified approach.

With reference to Pillar Two, following the position taken by the US Administration on the two Pillars, in June 2025 the G7 issued a statement acknowledging the US withdrawal and signalling readiness to work on a “side-by-side” (SbS) approach. On 5 January 2026, the OECD subsequently released the Side-by-Side Package, administrative guidance containing a new “Side-by-Side Safe Harbour” that currently recognises only the US as an eligible jurisdiction listed in the OECD’s Central Record as having a qualified SbS regime. In addition, Brazil and India have signalled their intention to withdraw from the Global Minimum Tax Framework. On the other hand, Israel, Slovenia, Liechtenstein and Thailand have completed their regulatory framework, implementing the Pillar Two global minimum rules.

Among other things, the BEPS Inclusive Framework agreed on the design of a Transitional CbCR Safe Harbour as a short-term measure that would exclude MNE groups’ operations in lower-risk jurisdictions from the scope of global anti-base erosion (GloBE) rules in the initial years.

The Transitional CbCR Safe Harbour is based on country-by-country reporting (CbCR) data to calculate MNE groups’ revenue and income on a jurisdictional basis. The Transitional CbCR Safe Harbour uses the CbCR as a risk assessment tool to establish whether a top-up tax liability results under the GloBE rules. Furthermore, the agreed package includes a one-year extension of the Transitional CbCR Safe Harbour.

Another relevant development concerns the continued update of the OECD transfer pricing country profiles, aimed at reflecting the current state of domestic legislation and the extent to which national rules align with the OECD Transfer Pricing Guidelines.

Between 2025 and early 2026, the OECD released updated profiles of 62 jurisdictions (out of a total of 83 jurisdictions covered so far) and published for the first time the profiles of several additional jurisdictions, including Azerbaijan, Cabo Verde, Guatemala, Pakistan, Thailand, UAE and Zambia.

The update concerned new information on country-specific legislation and practice regarding the transfer pricing treatment of hard–to–value intangibles and the simplified and streamlined approach for baseline marketing and distribution activities.

In the context of ensuring greater clarity in taxpayer-tax authority relations, on 2 February 2026, the OECD released an updated edition of the Manual on Effective Mutual Agreement Procedures (MEMAP) to help tax administrations and taxpayers resolve international tax disputes. The updated manual introduces a more structured roadmap for mutual agreement procedures (MAPs), starting from “pre-MAP consultations” and covering both unilateral and bilateral phases of the procedure. The update is also particularly valuable considering that the OECD has introduced specific protocols to assist tax administrations with fewer resources or less experience in complex international tax programmes.

Moreover, in 2025 the OECD also updated the Model Tax Convention on Income and on Capital, providing – among others – new and detailed guidance on short-term cross-border remote work and on the taxation of income from natural resource extraction. The update, approved by the OECD Council, aims to provide greater certainty for governments and businesses worldwide.

Trade developments and potential transfer pricing implications

As mentioned, 2025 was characterised by the introduction of new tariff measures by the Trump administration between, among others, the United States and the EU. The current tariffs system, as of late February 2026, provides for the application of a 10% global tariff on most imports and, as mentioned by the US Treasury Secretary, it is likely that the tariffs will be increased in the course of 2026 to 15%.

From a transfer pricing perspective, the introduction of tariffs may significantly affect cross-border transactions between the USA and the EU and increase uncertainty in international trade. In the short term, multinational groups are more likely to reassess pricing policies and contractual arrangements to allocate tariff-related costs within the group rather than implement immediate structural changes to their supply chains. More substantial operational reorganisations, such as relocation of production or sourcing strategies, generally require longer planning horizons and significant investment. Therefore, the main short-term implications are expected to arise in the form of transfer pricing adjustments, renegotiation of intra-group arrangements and broader tax and business impact assessments aimed at mitigating the effect of higher duties.

United Nations level

The Subcommittee on Transfer Pricing established by the United Nations Committee of Experts on International Cooperation in Tax Matters concluded its 2021–2025 membership and issued six guidance reports: two of them sectoral (pharmaceuticals; agriculture), two transaction-specific (carbon offsets and credits; coronavirus disease (COVID-19) economic downturn) and two administrative (compliance assurance; dispute avoidance and resolution).

The newly appointed subcommittee’s mandate for 2025–2029 includes updating the 2021 United Nations Practical Manual on Transfer Pricing for Developing Countries by adding or amending guidance on financial transactions, intra-group services, intangibles and simplification measures (safe harbours); sector-specific transfer pricing guidance for the information and communication technology industry; and supplementary guidance on unilateral advance pricing agreements addressing implementation challenges in the context of developing countries.

EU level

On 21 October 2025, as part of the EU’s 2026 Work Programme, which focuses on strengthening EU sovereignty, competitiveness and resilience, the European Commission formally withdrew its Proposal for a Council Directive on transfer pricing. The proposal, presented in September 2023, was intended to harmonise key transfer pricing rules of member states and ensure a common approach to the arm’s length principle within the EU. The proposed directive suggested alignment to the latest OECD Guidelines and acknowledged the possibility that future guidelines may be issued by the UN. With the EU withdrawal from building a common transfer pricing framework, the spotlight returns to national legislation aligned with the OECD Transfer Pricing Guidelines.

On the side of non-legislative initiatives, it is worth mentioning ETACA, a cross-border co-operative compliance programme, between tax administrations and MNE groups with global consolidated group revenue above EUR750 million, focused on transfer pricing risks. Covered transactions are intercompany transactions where one of the parties performs only limited functions and/or carries only limited risks and/or does not make unique and valuable contributions. These would include routine distribution activities, contract manufacturing activities and low value-adding intra-group services. Following the First Pilot Phase, EU member states, together with the European Commission, have launched the Second Pilot, with 17 member states having expressed their willingness to participate in the programme.

VAT and transfer pricing in the EU

As far as value added tax (VAT) is concerned, recent case law from the Court of Justice of the European Union has addressed the interaction between transfer pricing adjustment and VAT in Arcomet (ECJ C-726/23 – 4/09/2025).

The decisions concern whether year-end transfer pricing adjustments (eg, lump-sum payments made to align margins) should be treated as taxable transactions for VAT purposes or merely as financial flows. According to the EU court, a transfer pricing adjustment may qualify as a taxable transaction if the payment is linked to identifiable intra-group services or supplies.

In the same argument, Advocate General Kokott issued an Opinion in the Stellantis Portugal case (C-603/24 – 15/01/26), for which the judgment of the court is still pending.

From a legislative perspective, in March 2025 the Council of the European Union adopted the “VAT in the Digital Age” (ViDA) package.

This package provides that, where a transfer pricing adjustment is deemed relevant for VAT purposes, it can no longer be managed through a single, aggregate year-end debit or credit note, but it must be reflected in the digital records of the related transaction.

Tax certainty and the transfer pricing framework: global statistics for MAPs and APAs

On 31 October 2025, the OECD released its annual statistics on MAPs, including data on bilateral and multilateral APAs for 2024. These statistics monitor the implementation of Action 14 of the G20/OECD BEPS Project, which aims to verify the effectiveness of international tax dispute resolution mechanisms. The data covers 141 jurisdictions, providing a nearly complete representation of MAP cases worldwide. The APA statistics, derived from 49 jurisdictions, represent additional efforts under Action 14.

The global average MAP case closure time is 27.4 months (30.9 months for transfer pricing cases and 24.5 months for other cases). Trends show an increase in open and closed cases. The success rate for agreements concluded is 76%. In the absence of an arbitration clause, competent authorities are required to make efforts to eliminate double taxation, though there is no specific obligation concerning the results.

Regarding APAs, according to the 2024 OECD APA statistics, 80 jurisdictions reported allowing bilateral APAs, with 49 actively managing cases. In 2024, the number of bilateral APAs filed increased by 3%, and roughly a quarter of the inventory was closed, consistent with 2023. The average closure time increased to 39.6 months from 36.8 months in 2023. Bilateral APAs show increased efficiency and usage but remain time-intensive, making them more suitable for complex, high-value cases. The rise of co-operative compliance programmes and the OECD’s enhanced International Compliance Assurance Programme (ICAP) highlight the importance of adhering to the Transfer Pricing Guidelines.

However, participation in co-operative compliance programmes does not eliminate the risk of tax disputes in other jurisdictions involved in the same intercompany transactions. Transfer pricing involving multiple jurisdictions requires a strategic evaluation of tools to manage the risks of double taxation, as no single mechanism guarantees complete tax certainty.

Compliance with transfer pricing rules: relevance for single states and taxpayers

Beyond the strategic tools of co-operative compliance mentioned above, adherence to transfer pricing rules remains a key priority for both states and taxpayers.

For example, the Internal Revenue Service (IRS) in the United States has strengthened transfer pricing enforcement through targeted initiatives and expanded audit activity. In parallel, the Supreme Court’s Loper Bright decision (June 2024), which overturned the Chevron doctrine, has started to reshape tax litigation by requiring courts to exercise independent judgment and adopt the best reading of the statute rather than automatically deferring to agency interpretations. This shift has influenced tax cases, with the courts scrutinising IRS rules more closely, as in the recent 3M case where the Eighth Circuit parsed Section 482 of the Code sentence by sentence and, relying on Loper Bright, concluded that Treasury Regulation Section 1.482-1(h)(2) did not offer the best reading of the statute.

In 2025, several Supreme Court decisions significantly clarified the application of transfer pricing rules in Korea. The courts reaffirmed that the burden of proof for transfer pricing adjustments lies with the tax authorities and emphasised the need for a robust comparability analysis when applying the Transactional Net Margin Method (TNMM), particularly with respect to differences in products, functions and risks. The Supreme Court also clarified that prices agreed between shareholders in a joint venture cannot automatically be considered arm’s length and must be supported by recognised transfer pricing methods under the Law for Coordination of International Taxes Affairs (LCITA). In addition, legislative amendments introduced in December 2025 strengthened the documentation requirements for self-initiated transfer pricing adjustments, requiring taxpayers to provide evidence that a corresponding adjustment has been recognised in the counterparty’s jurisdiction. Finally, Korea has continued to expand its international tax framework and administrative transparency, including the expansion of its treaty network to 97 tax treaties and the publication of the 2024 APA Annual Report in November 2025.

Other jurisdictions have also introduced developments aimed at strengthening compliance and dispute-prevention mechanisms. In December 2025, the UAE issued non-binding general guidance on procedural aspects of APAs. In Austria, the Tax Amendment Act 2025 introduced a unified 15% minimum tax rate for foreign subsidiaries and adopted the OECD’s updated rules on home office permanent establishments. Cyprus has also entered a phase of legislative reform, including targeted changes such as an expanded definition of connected persons, higher Local File thresholds and a shorter tax return filing deadline.

Recent developments in Switzerland, by contrast, mainly arise from case law and changes in the international trade environment. The Swiss Federal Supreme Court confirmed the use of the cost-plus method in a hydropower case and accepted a cost base including income taxes and a notional return on equity, although this approach applies only in a domestic context. In addition, a cantonal court decision reaffirmed the Swiss principle of periodicity, rejecting the use of multi-year averaging to justify low profitability in a specific year. Finally, increased tariff volatility since 2025 has raised new challenges in the interaction between transfer pricing and customs valuation in Switzerland.