OECD proposes TP Guidelines revision on intra-group services
03/06/26
On 1 June 2026, the OECD released a public consultation document proposing revisions to Chapter VII of the OECD Transfer Pricing Guidelines, prepared by Working Party No. 6, which contains guidance on the transfer pricing of intra-group services.
The proposed revisions introduce a more comprehensive framework for analysing and pricing intra-group services. Key themes include a greater focus on accurate delineation, a more refined application of the benefit test, expanded guidance on interconnected transaction and a dedicated section on evidentiary considerations and documentation.
The key themes are outlined below.
Emphasis on the accurate delineation framework’s role to inform the characterisation and pricing of intra-group services
Emphasis on the accurate delineation framework
One of the notable changes in the proposed guidance is that the proposed Chapter VII is rebuilt around the accurate delineation framework. Rather than immediately applying the benefit test as is the case in the existing Chapter VII, the proposed guidance first requires taxpayers to analyse the commercial and financial relations between the parties and the economically relevant characteristics of the arrangement, increasing the required granularity of the analysis.
Presumptions on routine services should not drive the transfer pricing analysis
A recurring theme throughout the proposed chapter is the OECD’s rejection of the implicit assumptions that intra-group services are generally routine transactions that can be priced using a one-sided approach, and that either the service party or recipient should automatically be treated as the tested party. Instead, the determination for characterisation and remuneration should follow from the facts and circumstances of the specific arrangement.
The proposed chapter further strengthens the role of functional analysis by emphasising the relevance of assets used, risks assumed and decision-making functions performed by the parties. Consistent with this approach, the OECD confirms that cost-based methods should not automatically be regarded as the most appropriate pricing methodology for services and explicitly recognises that more complex methods, including the profit split method, may be appropriate where parties make unique and valuable contributions or share economically significant risks.
Incorporating expected benefit in the application of the benefit test
The proposed chapter expands and refines the application of the benefit test. The most notable clarification is that greater emphasis is placed including expected benefit when performing the test at the time the activity is undertaken. The OECD clarifies that a benefit may arise in various forms, including an expected increase in revenues or profitability, a reduction in expenses or enhancements to products and business processes. This broader articulation reinforces that benefits should not be assessed solely by reference to immediate financial outcomes. The proposed chapter further recognises that the benefits arising from an intra-group service may materialise during or after the period in which the activity is performed. This acknowledgement is particularly relevant for services whose value may only become apparent over time, such as strategic advisory services, training programs or business transformation initiatives or other activities intended to generate long-term operational improvements.
The proposed chapter also confirms that a benefit need not be guaranteed and that the failure of a project to generate the anticipated outcome does not in itself demonstrate that no service has been rendered. This approach is reinforced through new examples provided in the annex of the proposed chapter involving unsuccessful projects, which further illustrate that the existence of a service should generally be assessed also on the basis of expected benefit.
Moving beyond formal classifications in applying the benefit test
The proposed chapter introduces an important interpretative clarification by emphasising that shareholder activities, duplicative activities and incidental benefits should not be viewed as mutually exclusive categories for the purpose of the benefit test. Instead, the OECD presents them as example application of the broader benefit test, reinforcing that the key question remains whether the activity provides economic or commercial value that an independent enterprise would be willing to pay for, or perform itself.
The proposed chapter also expands the guidance on shareholder activities. In particular, the OECD clarifies that an activity should not be regarded as a shareholder activity merely because the parent company derives a benefit from it. Where other group entities receive economic or commercial value that they would be willing to pay for, or perform themselves, the activity may constitute an intra-group service. The revised guidance further recognises that certain activities may simultaneously benefit both the parent and other group entities, highlighting the importance of identifying the respective beneficiaries and allocating costs accordingly.
Greater focus on interconnected transactions and intangible contributions
The proposed chapter emphasises that the accurate delineation process requires an understanding of the broader commercial relationship between associated enterprises and any interdependencies among transactions. This includes situations where services are performed using valuable intangibles or where services contribute to the creation, enhancement or transfer of know-how. The accompanying examples provided in the annex of the proposed chapter discuss this point by illustrating situations where service arrangements are closely linked to intangible-related contributions. The examples demonstrate that what may initially appear to be a routine service can, depending on the case, involve a transfer of an intangible.
The OECD also explicitly notes that where intra-group services can be linked to other transactions such as transfers of goods, transfers of intangibles, or licences of intellectual property, taxpayers may need to consider the Chapter III aggregation and segregation principles rather than assuming a separate service transaction exists.
Strengthening the evidentiary framework for intra-group services
The proposed chapter introduces a dedicated documentation section and expands the discussion of evidence that may be used to support both the existence of an intra-group service and the arm’s length nature of the related charge. While the OECD emphasises that the guidance does not establish a new documentation standard or mandatory checklist, it provides detailed examples of evidence that may be relevant in practice. At the same time, the OECD indicates that information requests by tax administrations should remain proportionate to the materiality of the transaction and the associated compliance burden.
Consistent with the proposed chapter’s emphasis on incorporating expected benefit in the application of the benefit test, the OECD suggests that taxpayers may rely on contemporaneous evidence to demonstrate that anticipated benefits were reasonably expected when the activity was undertaken, even where those benefits do not ultimately materialise. The pricing documentation can include service agreements, invoices, support for allocation methodologies, cost pool calculations and internal cost-breakdown distinguishing between pass-through costs and costs subject to a mark-up.
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