Transfer Pricing of Mayor EC Member Countries with Reference to the 2014 Corporate Income Tax Burden of the Thirty-Four OECD Member Countries – Germany, France, United Kingdom, and Italy Compared

Abstract:

In the February 2014 issue of the EC Tax Review, the author compared the anti-avoidance legislation in the mayor EC Member Countries Germany, France, United Kingdom and Italy and suggested some international tax planning strategies - without regard to transfer pricing (part 1). The author now considers transfer pricing involving these mayors EC Member Countries Germany, France, United Kingdom, and Italy and suggests further transfer pricing strategies also with regard to the up-to-date CIT rates in OECD countries (part 2).

As stated, despite continuous instability in the European Community (EC) its mayor countries Germany, France, the United Kingdom, and Italy exhibit continuously economic growth and stability. According to the International Monetary Fund these European countries have - in this order - the highest gross domestic product in the European Community in 2012. In this article transfer pricing rules of - according to the gross domestic product - the four most important EC Member Countries will be reviewed with reference to the OECD's perspective of Base Erosion and Profit Shifting (BEPS) and to the up-to-date tax differential to the thirty-four OECD Member Countries.

The pivotal question is, to what extent can internal tax planning with mayor EC Member Countries be optimized by inclusion of transfer pricing. This article outlines the primary corporate objective and key concepts of international tax planning with regard to transfer pricing and discusses the corporate income tax burden in the thirty-four OECD Member Countries analysing the tax differential as incentive in relation to transfer pricing, the reduction in ETR as the primary corporate objective and key concepts and the he importance of current and reliable information. After that transfer pricing in the mayor EC Member Countries Germany, France, United Kingdom, and Italy is presented and transfer pricing strategies with relation to mayor EC Member Countries are developed. Afterwards this is evaluated from the OECD's perspective of BEPS. Finally the concluding remarks are presented.