OECD Draft Revision of Chapter VII of the Transfer Pricing Guidelines on Intra-Group Services
On 1 June 2026, the OECD released for public consultation a draft revision of Chapter VII of the Transfer Pricing Guidelines, concerning intra-group services.
The deadline for submitting comments is 22 July 2026, while a further public consultation is expected to take place in November 2026. The draft does not yet represent the OECD’s final position, but it is a relevant working document for the development of practices concerning intercompany services.
The proposed amendments currently under consultation mainly concern the definition of services, the determination of the arm’s length charge and the conditions applicable to such services, as well as the documentation required to support the analysis.
A first key element is the distinction between the benefit test and the arm’s length pricing analysis.
The benefit test is aimed at verifying whether the activity performed by a group company has provided, or could reasonably be expected to provide, an economic or commercial benefit to one or more associated enterprises.
The pricing analysis, on the other hand, concerns the assessment of whether the charge applied for the service is consistent with the arm’s length principle.
The draft clarifies that these two analyses should remain distinct. Any non-compliance of the price or mark-up should not automatically lead to the denial of the existence of the service, but should instead result, where appropriate, in an adjustment to the charge.
The revised approach to the benefit test places particular emphasis on the benefit received by the individual recipient entity. The benefit may consist of any economic or commercial value, including an expected benefit that is not immediately measurable, provided that it is identifiable, reasonably foreseeable at the time of the transaction and not merely incidental.
This approach is particularly relevant in practice for services such as IT, cybersecurity, marketing, compliance, procurement, administrative activities, strategic consulting and business transformation projects, where the benefit may arise at a later stage than the actual provision of the service.
The draft also reinforces the importance of the accurate delineation of the transaction. Before determining the price of the service, it is necessary to identify the nature of the transaction, the functions performed, the risks assumed, the assets used and the relevant economic circumstances.
In this respect, contracts, invoices or generic descriptions such as “management fee”, “service fee” or “administrative services” are not, in themselves, sufficient to demonstrate that the service has actually been provided. At the same time, the absence of a payment or a written agreement does not automatically exclude the existence of an intra-group transaction, where the facts show that a service has in fact been rendered.
A further aspect concerns the distinction between chargeable and non-chargeable activities.
The draft confirms that shareholder activities, namely activities carried out by the parent company in its own capacity as shareholder, as well as duplicative activities and merely incidental benefits arising from group membership, should be excluded from the scope of chargeable services.
Particular attention is also given to the distinction between pure shareholder activities and stewardship activities or strategic supervision, meaning activities involving guidance, coordination and strategic oversight carried out by the parent company to support the management of the group or specific subsidiaries. In certain cases, these activities may generate a specific benefit for the associated enterprises.
As regards the determination of the charge, the draft moves away from any automatic use of the cost plus method. However, for routine or support services, a cost-based remuneration, possibly including a mark-up, may continue to be appropriate.
Conversely, for complex or highly integrated services, services connected with intangibles, or services involving significant contributions, it may be necessary to consider other methods, such as the CUP method, the TNMM or the transactional profit split method. The draft also confirms that the simplified 5% mark-up applicable to low value-adding intra-group services does not constitute a general benchmark applicable to all types of services.
The draft also provides guidance on pass-through costs. The recharging of costs without a mark-up may be consistent with the arm’s length principle. However, where the entity incurring the cost performs additional functions, assumes risks or adds value in managing the activity, the application of a remuneration may be justified.
Finally, the new section on documentation is particularly relevant and is intended to complement the guidance contained in Chapter V. The documentation should make it possible to demonstrate both the existence of the service and the appropriateness of the charge applied, through contemporaneous evidence such as contracts, detailed descriptions of the activities, emails, reports, presentations, tickets, deliverables, cost allocation schedules, details of the cost base, justification of the allocation keys and analysis of the transfer pricing method adopted.
In summary, the OECD draft does not radically change the principles applicable to intra-group services, but it raises the level of detail required in the analysis and documentation.
The main practical implication is the need to prepare a robust, consistent and contemporaneous documentation set, capable of demonstrating the actual provision of the service, the expected or received benefit for the individual entity, the reasonableness of the allocation criteria, the proper distinction between chargeable and non-chargeable costs, and the compliance of the charge with the arm’s length principle.
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