MULTINATIONAL ENTERPRISE (MNE) AND MNE GROUP
According to the OECD Transfer Pricing Guidelines:
- A MNE is a company that is part of a MNE group.
- A MNE group is a group of associated companies with business establishments in two or more countries.
Standardized documentation
A uniform, EU-wide set of rules for documentation requirements according to which all enterprises in Member States prepare separate and unique documentation packages. This more prescriptive approach aims at arriving at a decentralised but standardized set of documentation, i.e. each entity in a multinational group prepares its own documentation, but according to the same rules.
Centralized (integrated global) documentation
A single documentation package (core documentation) on a global or regional basis that is prepared by the parent company or headquarters of a group of companies in a EU-wide standardized and consistent form. This documentation package can serve as the basis for preparing local country documentation from both local and central sources.
EU Transfer Pricing Documentation (EU TPD)
The EU Transfer Pricing Documentation (EU TPD) approach combines aspects of the standardized and of the centralized (integrated global) documentation approach. A multinational group would prepare one set of standardized and consistent transfer pricing documentation that would consist of two main parts: (i) one uniform set of documentation containing common standardized information relevant for all EU group members (the "masterfile") and (ii) several sets of standardized documentation each containing country-specific information ("country-specific documentation"). The documentation set for a given country would consist of the common masterfile supplemented by the standardized country-specific documentation for that country.
Documentation-related penalty
An administrative (or civil) penalty imposed for failure to comply with the EU TPD or the domestic documentation requirements of a Member State (depending on which requirements the MNE has chosen to comply with) at the time the EU TPD or the domestic documentation required by a Member State was due to be submitted to the tax administration.
Cooperation-related penalty
An administrative (or civil) penalty imposed for failure to comply in a timely manner with a specific request of a tax administration to submit additional information or documents going beyond the EU TPD or the domestic documentation requirements of a Member State (depending on which requirements the MNE has chosen to comply with).
Adjustment-related penalty
A penalty imposed for failure to comply with the arm's length principle usually levied in the form of a surcharge at a fixed amount or a certain percentage of the transfer pricing adjustment or the tax understatement.
[1] "Company Taxation in the Internal Market", Commission staff working paper, SEC(2001) 1681, 23.10.2001.
[2] Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee: "Towards an internal market without obstacles - A strategy for providing companies with a consolidated corporate tax base for their EU-wide activities" COM(2001) 582 final, 23.10.2001.
[3] http://europa.eu.int/comm/taxation_customs/taxation/company_tax/transfer_pricing/index_en.htm
[4] COM(2004) 297 final, 23.4.2004: "Communication on the work of the EU JTPF from October 2002 to December 2003 and on a proposal for a Code of Conduct for the effective implementation of the Arbitration Convention (90/436/EEC of 23 July 1990)."
[5] SEC(2005) Report on transfer pricing documentation prepared by the EU Joint Transfer Pricing Forum.
[6] Communication from the Commission to the Council, the European Parliament and the European Economic and Social Committee on the work of the EU Joint Transfer Pricing Forum in the field of business taxation from October 2002 to December 2003 and on a proposal for a Code of Conduct for the effective implementation of the Arbitration Convention (90/436/EEC of 23 July 1990) (COM(2004) 297 final of 23 April 2004).
[7] Convention 90/436/EEC of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises OJ L 255, 20.8.1990, p. 10-24.
[8] Not yet published in the OJ.
[9] " CompanyTaxation in the Internal Market" Commission staff working paper, SEC(2001) 1681 23.10.2001.
[10] Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee: " Towards an Internal Market without obstacles - a strategy for providing companies with a consolidated corporate tax base for their EU-wide activities" COM(2001) 582 final, 23.10.2001.
[11] "Communication on the work of the EU JTPF from October 2002 to December 2003 and on a proposal for a Code of Conduct for the effective implementation of the Arbitration Convention (90/436/EEC 23 July 1990)" Com(2004) 297 final, 23.04.2004.
[12] Convention 90/436/EEC of 23 July 1990 on the elimination of double taxation in connection with the adjustment of profits of associated enterprises, OJ L 255, 20.8.1990, p. 10-24.
[13] SEC(2005) Report on transfer pricing documentation prepared by the EU Joint Transfer Pricing Forum.
[14] "Company Taxation in the Internal Market" Commission staff working paper, SEC(2001) 1681, 23.10.2001.
[15] Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee: "Towards an internal market without obstacles - A strategy for providing companies with a consolidated corporate tax base for their EU-wide activities" COM(2001) 582 final, 23.10.2001.
