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Welcome to our latest round-up on recent international transfer pricing developments.

The key recent development was the European Commission’s (EC) final decision in the case regarding UK CFC finance company exemption. The EC found that the finance company exemption within the UK CFC rules is “partly justified”. The UK government is now required to initiate recovery of the alleged State aid irrespective of any appeal against the decision.  It seems most likely, at this stage, that recovery will be based on the extent to which the UK has significant people functions. Read more about the EC decision and its implications for business on our EU State Aid - UK CFC Hub.

The OECD’s BEPS initiative “Addressing the tax challenges of the digitalisation of the economy” also remains to be one of the topical issues in the world of transfer pricing. It is still unclear what approach will ultimately be taken but this initiative is likely to have an impact on a number of businesses (well beyond digital businesses).

Whilst no consensus has been reached at the EU level on Digital Services Tax (DST), certain EU countries are taking unilateral steps with respect to the introduction of DST (e.g. the UK, France, Italy, Spain).

You will find more information about the key recent developments below.