Transfer pricing rules as trade restrictions: Is the OECD’s HTVI approach compatible with the EU fundamental freedoms?

Abstract: This thesis considers whether the OECD’s HTVI approach is compatible with the EU fundamental freedoms. Its conclusions are of relevance to EU Member States who have implemented, or are looking to implement, the HTVI approach as part of a national transfer pricing regime. Because it is incompatible with the ALP as promulgated by the OECD, the HTVI approach cannot be declared compatible with the fundamental freedoms pursuant to previous transfer pricing cases decided by the EU Court of Justice. Therefore, compatibility must be considered anew. Although a taxpayer may sometimes be able to invoke the freedom of capital to obtain protection also in relation to third states, application of the HTVI approach to such facts may be justified pursuant to the Court’s case law on national anti-avoidance measures. In an intra-EU context, however, the HTVI approach may not be justified as an anti-avoidance measure. That being said, the EU doctrine of ‘abuse of law’ might provide some support for intra-EU application of the HTVI approach.