The European Commission has adopted (on 10 November last) a proposal for a Code of Conduct that would standardise the documentation that multinationals must provide to tax authorities on their pricing of cross-border intra-group transactions (“transfer pricing” documentation).

The Commission proposal is for a Code of Conduct for new standardised and partially centralised “EU Transfer Pricing Documentation”. The documentation that multinational enterprises would have to file with tax administrations in order to report on their pricing for cross-border intra-group activities would consist of two main parts:

• One set of documentation (the “masterfile”) should provide a “blue print” of the company and its transfer pricing system that would be relevant and available to all EU Member States concerned. It would provide information such as a general description of the business and business strategy, of the transactions involving associated enterprises in the EU and of the enterprise's transfer pricing policy.
• Second, a set of standardised documentation (“country-specific documentation”) for each of the specific Member States concerned with the intra- group transactions. This documentation would include information such as amounts of transaction flows within that country, contractual terms and the particular transfer pricing methods used and would only be available to the relevant Member State.

The full text of the Code is available at http://www.europa.eu.int/comm/taxation_customs/resources/documents/COM(2005)543_en.pdf