“Transfer pricing is a topic that concerns all stakeholders in cross-border transactions, from structuring a deal to its implementation, compliance and ongoing assessment,” explained , president of the Luxembourg Transfer Pricing Association (LTPA) during the official launch ceremony of the organisation on 25 February 2025. But prior to the establishment of the LTPA in 2024, the grand duchy did not have an association dedicated to the topic. “This is precisely why the LTPA was created: to bring us all together on a single platform where we can exchange knowledge, collaborate and strengthen Luxembourg in transfer pricing.” The association aims to provide leadership, develop best practices, boost communication amongst players, advocate, organise networking events and conferences, and produce publications on transfer pricing trends and developments.

The conference, which brought together experts from the legal and financial sectors, the grand duchy’s tax authorities and international institutions, featured remarks by finance minister (CSV). “Transfer pricing is a niche of the financial industry,” he said. “It doesn’t have the same visibility as fintech or sustainable funds, but make no mistake: niches are important. And your niche is fundamental to the functioning of international companies, our financial centre and--indeed--our economy. It is about ensuring fairness in cross-border transactions; it is about giving companies the certainty they need to operate globally. And most importantly, it is about protecting Luxembourg’s reputation as a responsible and compliant financial centre, as well as Luxembourg’s tax base.”

The transfer pricing landscape is “rapidly evolving,” he added, making the need for an association clear. At the global level, “one initiative gaining attention is Amount B [part of the OECD’s Pillar One], which aims to simplify transfer pricing rules for routine marketing and distribution activities. However, there are concerns about this standardised approach, and Luxembourg is carefully assessing its potential.”

“Regarding the implementation of Pillar Two,” which concerns a tax rate of at least 15% for multinationals with consolidated revenue of at least €750m, he continued, “Luxembourg has taken a proactive role in implementing the OECD Pillar Two framework.”

But as one of his first executive orders, US president Donald Trump in January , stating it had “no force or effect” in the United States. For Roth, “I believe that first we must wait until US demands have become clear. But we need to be prepared when that moment erupts. A unified EU approach to those discussions will help to best defend the EU member states’ interests, which is also in our own interest. We are certainly willing to engage constructively with the US. At the same time, Pillar Two is a prime example of what multilateralism can achieve. It is therefore of utmost importance that any US demands are discussed and agreed upon multilaterally.” Any changes, he added, must “not negatively impact the global level playing field.”

“At the European level, discussions continue on a draft transfer pricing directive aimed at harmonising rules and fostering cooperation across member states. While standardisation presents challenges, initiatives such as a proposed EU transfer pricing platform could improve transparency and coordination, making administration more efficient and predictable.”

Tools to manage transfer pricing disputes

There are also ongoing talks around dispute resolution, added Roth, a topic that was further explored by Sophie Balliet, counsel at A&O Shearman, and Tiphanie Grzeszezak, associate at the law firm.

As Balliet explained, transfer pricing audits have increased in recent years, becoming more sophisticated as tax authorities across countries collaborate more and put in place dedicated teams to carry out targeted audits. “Looking at OECD statistics over the last decade or so, transfer pricing disputes have increased by approximately 350%,” she noted. In Luxembourg specifically, tax litigation has increased by 57% between 2014 and 2023. In the global context, “I think it’s fair to say that multinational groups are currently facing the most challenging audit and dispute environment in history.”

Challenges regarding tax audits can go to court, but this is not always the case. There are other ways to resolve these issues, said Grzeszezak. There’s the mutual agreement procedure and advanced pricing agreements (APA). The mutual agreement procedure can be effective, but the process can be long. Advanced pricing agreements can offer more certainty and predictability by offering a clear framework for transfer pricing and reducing the risk of future disparities, but they do take time. In Luxembourg in 2022 and 2023, however, only two APAs were requested, with 50% of them being favourable. When it comes to the mutual agreement procedure, 18 were initiated in Luxembourg in 2023 and four were closed.

“Managing transfer pricing is a bit like driving,” said Balliet. It’s best to “anticipate” and have consistent transfer pricing policies in place, along with the necessary transfer pricing and legal documentation.

What’s on the OECD’s agenda

First mentioned by Luxembourg’s finance minister, Amount B came back into the spotlight later during the conference.

Gabriela Capristano Cardoso, a Paris-based analyst in the transfer pricing unit at the OECD, noted that “Amount B is really our focus. It has been our focus for the past years; it’s still on our agenda this year.” Part of the institution’s tax certainty and simplification agenda, Amount B “introduces a simplified and streamlined approach for applying the arm’s length principle to in-country baseline marketing and distribution activities,” explains the OECD.

The OECD has even published a simple Excel tool on its website that allows companies to input data like net revenues and operating expenses and to do a quick check to find out if they’re in the quantitative scope of Amount B. However, Capristano Cardoso noted that even if an entity passes the quantitative aspect, it may fall out of the scope of Amount B based on the qualitative aspect.

Besides Amount B and its implementation, Capristano Cardoso pointed out a few of the items on the OECD’s agenda: there’s the revision of chapter VII of the OECD Transfer Pricing Guidelines; global mobility; monitoring work on the effective implementation of OECD Transfer Pricing Guidelines, including Beps actions 8-10; and revision to the commentary on article 9 of the OECD Model Tax Convention.

More specialisation to come

Increased simplification and efficiency is also on the agenda at the Luxembourg Inland Revenue (ACD), said director  during a fireside chat with Jean Schaffner, head of the tax practice at A&O Shearman Luxembourg.

Olinger, who , pointed out that the tax authority raises about €14.5bn in taxes every year. 350,000 personal income tax files and 120,000 corporate files are handled by 1,145 tax agents working in 24 buildings in 14 communes; 3.7m documents were exchanged with other countries. With all these numbers, “it’s very much about digitisation,” he said. “A very important element is simplifying processes, automating them, or at least digitising them afterwards.” But stakeholder centricity--whether that’s taxpayers, organisations like the OECD or the tax authorities of other countries--is also key, he argued.

And if you take a step back, “we have around 1,800 cases per year, which sounds like a lot.” The number of cases have increased, but so have the number of tax files overall. “If we compare this to 500,000 tax files every year, we have about 0.4%, which sounds--in more relative terms--more reasonable. And of those 1,800, roughly 150 or 160 go to court,” he explained. The aim is not necessarily to reduce the number the number of cases, he added, but rather to provide “more clarity.”

When it comes to trends in the transfer pricing landscape specifically, Olinger noted that there’s Pillar One, Pillar Two and discussions around an EU transfer pricing directive. “Besides that, we also see that uncertainty has come back--and uncertainty, considering also maybe the positioning of some countries towards multilateralism in tax questions,” he said. “One element that is definitely clear for the years to come is that we will base ourselves on what exists, what is working,” like mutual agreement procedures. “I believe that this is going to increase going forward.”

Tax topics have indeed become more complex over the past few years, and “specialisation within the administration is an element that we are going to continue,” concluded Olinger. “An element will be maybe creating some centres of excellency or some competence centres within the administration, maybe together with the ministry, maybe with other actors.”