4 minutes read
Jan-Willem Kunen, Kas Hafkamp, Lars Willemsen
On 22 July 2026, our Transfer Pricing team submitted its comments to the OECD's public consultation on proposed revisions to Chapter VII of the OECD Transfer Pricing Guidelines, which deals with the special considerations for intra-group services. With intra-group services being among the most common controlled transactions that taxpayers and tax administrations deal with in practice, and among the most frequent sources of controversy, the modernisation of this chapter by Working Party No. 6 is a significant development for MNE groups.
The consultation document, released on 1 June 2026, seeks to align the guidance on intra-group services more closely with the foundational principles in Chapters I to III and to add clarity through a substantial number of new examples, without changing the underlying principles. In practice, the draft is nonetheless a significant rewrite: it makes the accurate delineation of the transaction the starting point of the analysis, reworks and expands the benefit test, introduces a dedicated documentation section, and adds new guidance on the transactional profit split method, pass-through costs and stock or share-based compensation. For further details on the consultation document, we refer to the paragraph ‘Highlights of the consultation draft’ below.
In our comments, we assessed the proposals against two practical yardsticks: whether they are consistent with the broader OECD Transfer Pricing Guidelines and whether they reduce, rather than increase, the compliance burden and the scope for double taxation.
We welcome many of the changes. These include the move away from an automatic cost-plus, one-sided characterisation, the confirmation that the 5% mark-up for low value-adding services does not operate as a floor for other services, and the recognition that an MNE group is free to organise the provision of its services as it sees fit.
At the same time, we suggest several clarifications. We believe it would be helpful to make clear that the new material, including the expanded documentation and benefit-test guidance and the new profit split section, should not be interpreted as raising the evidentiary bar. Nor should it be seen as an invitation for tax administrations to apply the profit split method by default.
Our comments are divided into two parts. In the first part we set out general comments on the revisions to the chapter. In the second part we address the specific questions on which the OECD expressly invited input: shareholder activities, allocation keys, and stock or share-based compensation. To read our submission in full, please click the download button below.
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The OECD will hold a public consultation on the discussion draft in November 2026 before finalising the guidance. MNE groups with material intra-group services will want to assess how the proposed changes affect their existing service arrangements, intercompany documentation and potential exposure.
Highlights of the consultation draft
The proposed revisions represent the most extensive rewrite of Chapter VII since the introduction of the current guidance on intra-group services. While the OECD states that the revisions are intended to clarify rather than change existing principles, the consultation document places greater emphasis on accurate delineation and contemporaneous evidence. The revised framework aligns the analysis of intra-group services more closely with the general transfer pricing principles in Chapters I to III of the OECD Guidelines, by requiring taxpayers to first accurately delineate a transaction, before applying the benefit test and determining an arm’s length charge. It is made clear that no transfer pricing method, tested party or cost-based approach should be presumed merely because a transaction has been characterised as a service.
The benefit test is further developed and clarified. In particular, the OECD emphasises, that a benefit must be reasonably expected from an ex-ante perspective and may consist of any economic or commercial value, including cost savings, efficiencies or quality improvements, regardless of whether those benefits ultimately materialise.
The consultation document also introduces a dedicated documentation section, providing examples of contemporaneous evidence that may be relevant in demonstrating both the performance of services and the expected benefit for recipients. In addition, the OECD proposes new guidance on the application of the transactional profit split method to intra-group services and recognises that pass-through costs may, where appropriate, be recharged without a mark-up,
At the same time, the OECD reiterates that MNE groups remain free to organise the provision of their services as they see fit and that tax administrations should focus on the transfer pricing consequences of those arrangements rather than on the organisational choices themselves.
To illustrate the application of the proposed guidance, the consultation document is accompanied by 21 examples covering a wide range of intra-group service scenarios. The OECD has invited stakeholders to provide general comments on the draft as well as specific input on questions related to shareholder activities, allocation keys and stock or share-based compensation.
Contact us
Should you have any questions about how the proposed revisions to Chapter VII may affect intra-group services within your MNE group, please contact a member of our Transfer Pricing team or your regular contact at Loyens & Loeff.
