DLA Piper Provided Comments on the OECD Public Consultation on Chapter VII of the OECD

Background

The OECD's Transfer Pricing and International Collaboration Division launched a public consultation in June 2026 inviting comments on a discussion draft proposing revisions to Chapter VII of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (the TP Guidelines), which addresses special considerations for intra-group services.

Chapter VII sets out the transfer pricing framework applicable to intra-group services, including the benefit test, the distinction between chargeable and non-chargeable services, the treatment of shareholder activities, and guidance on low value-adding intra-group services. The discussion draft proposes revisions intended to align Chapter VII more closely with the principles in Chapters I–III of the 2022 TP Guidelines and to provide greater clarity for taxpayers and tax administrations.

DLA Piper’s Submission

DLA Piper’s submission welcomed the OECD’s initiative and expressed broad support for the direction of the proposed revisions, while providing feedback we believe will improve the clarity and functionality of the TP Guidelines. Our comments focused on the following key areas:

Benefit Test

We support the additional clarity that the OECD has provided around the benefit test, particularly the acknowledgement that a failure to realise an anticipated benefit does not necessarily mean that a service was not provided. We also made an overarching observation regarding central support functions; these functions often arise from group synergies and economies of scale. The fact that an independent enterprise may not maintain equivalent capabilities on a standalone basis should not, by itself, be treated as evidence that no benefit has been received.

Shareholders Activities and Mixed Functions

We welcomed the expanded guidance on the distinction between shareholder activities and chargeable intra-group services, and in particular the clarification that a single function or cost base may contain elements of both. We recommended that the revised Chapter VII include principles-based guidance on reasonable approaches for identifying and apportioning costs in such circumstances, to support more consistent and proportionate outcomes in practice.

We noted that the characterisation of activities under the category relating to ancillary activities to the corporate governance of the MNE as a whole should be interpreted narrowly and consistently with the general definition of shareholder activities, and that further illustrative examples would assist taxpayers and tax administrations in applying this category.

Allocation Keys

We considered that further guidance on allocation keys would be useful, provided it remains principles-based and illustrative rather than prescriptive. The fundamental principle should be that any allocation key must reasonably reflect the expected benefits received by the relevant service recipients, and that no particular key should be regarded as inherently acceptable or unacceptable solely by reference to its description.

We highlighted that the appropriate allocation methodology should remain proportionate to the nature and materiality of the service arrangement, and that taxpayers should retain flexibility to select and, where appropriate, adapt their chosen approach where this produces a more reasonable outcome in the specific circumstances.

Stock- and Share-Based Compensation

We acknowledged that the transfer pricing treatment of stock- or share-based compensation in the context of intra-group services raises practical challenges, including in relation to timing, valuation and consistency of approach across jurisdictions. We expressed support for further guidance that would promote greater consistency and reduce the risk of double taxation, while preserving sufficient flexibility to accommodate the wide variety of arrangements encountered in practice.

What This Means for Multinational Groups

The proposed revisions to Chapter VII, if adopted, will affect multinationals with cross-border intra-group service arrangements. Key areas to monitor include:

• The expanded contemporaneous documentation expectations regarding the benefit test;
• The treatment of centralised functions, such as senior management, treasury, legal and compliance, where shareholder and chargeable service elements coexist within the same cost base;
• The robustness of existing allocation key methodologies and whether these are adequately supported in light of any revised OECD guidance; and
• Recharging practices in relation to stock- and share-based compensation, which continue to attract scrutiny from tax administrations across multiple jurisdictions.

Multinational groups should review their existing intra-group service arrangements and supporting documentation in light of the proposed revisions. We will continue to monitor the progress of the consultation and report on further developments.

Please contact us for further information or if you would like to discuss how this may impact your business.