The settlement of procedures of double taxation resulting from the correction of transfer pricing between associated enterprises

With increasing cross-border trade between associated enterprises and means of control of international transactions by the tax authorities, the risk of disputes over transfer pricing necessarily increase. If these conflicts are not resolved, they can lead to double taxation, mainly of economic nature, and constitute obstacles to the free movement of goods and services in a globalised economy. Taxpayers and States therefore need effective procedures to resolve these situations, unanimously denounced by international organizations and taxpayers. However, current procedures are not entirely satisfactory. The European Commission and the O.E.C.D. have recently completed extensive work to improve the mechanisms. Dispute resolution in transfer pricing is certainly a hot to topic.

A critical analysis of all international settlement mechanisms of double taxation arising from transfer pricing adjustments is conducted. These procedures are examined, the causes of dysfunction sought and improvement measures are proposed, particularly in light of recent work of international organizations.

The first part is devoted to the mutual agreement procedure under bilateral double tax treaties. The analysis is carried out following a chronological approach of the stages of the procedure, from its opening till the implementation of the mutual agreement.

The second part deals with the new ways of resolving transfer pricing double taxation that are mediation, conciliation and arbitration in tax matters. Emphasis is on arbitration that is analysed both in conventional terms, as it has recently been integrated into the O.E.C.D. and U.N. model conventions, and as part of the European arbitration convention.

This work makes extensive reference to the O.E.C.D and France key partners' approaches. Nevertheless, it is not a work of comparative law but only examples to illustrate other practices.