Following the adoption of the EU Joint Transfer Pricing Forum’s ("JTPF") guidelines on low value adding intra-group services (PKN dated May 20, 2011), the Forum has now shifted its focus to Cost Contribution Arrangements ("CCAs"), which had been excluded from the scope of the mentioned guidelines. The objective of the EU JTPF is to explore the scope and degree of a common approach to such arrangements for tax administrations in 27 EU Member States, and hence ultimately to reduce tax disputes within the EU.
CCAs are usually arrangements between companies to share the costs and risks of developing, producing or obtaining assets, services or rights, for which the interests of each participant are determined. In the past, a number of EU Member States as well as private sector members highlighted the importance of a common approach to CCAs to avoid double taxation within the EU. While such arrangements have been used by multinational groups since the 1950s, the topic had not been addressed by the EU JTPF previously in order to not interfere with the ongoing work of the OECD (Chapter VIII of the OECD Transfer Pricing Guidelines on CCAs and the current OECD project on intangibles, PKN dated February 1, 2011). In line with this, the Forum has now decided to centre its discussions upon CCAs on service arrangements, which do not lead to the creation of intangibles.