The article investigates a specific aspect of the proposal
for an EU directive on transfer pricing: the arm’s length range. The matter is
addressed in Article 12 of the proposal which states that only the
interquartile range of values resulting from the benchmark can be considered as
being at arm’s length. This provision is in contrast with the indication of the
OECD Guidelines and the national transfer pricing provisions of various EU
Member States applying the OECD Guidelines, among which are Germany, Italy, the
Netherlands, Slovenia, and Spain. Both the guidelines and the national rules
establish that, when the level of comparability of the benchmarked observations
is high, the full range of results can be considered as being at AL. The full
range approach is often implemented in the financial transfer pricing practice,
and the article highlights the evident mismatch between the proposal and the current
transfer pricing reality. In the final section, the author proposes an
amendment to address such a lack of correspondence between the proposal and the
current OECD framework that is likely to create uncertainty for taxpayers if
Article 12 is not readjusted before the proposal’s approval.