OECD - Proposes Revisions to Chapter VII on Intra-Group Services

Summary

On August 24, 2026, the OECD published public comments received on proposed revisions to Chapter VII of the OECD Transfer Pricing Guidelines, which addresses intra-group services. The proposed revisions would update and modernize the existing guidance by aligning it with the foundational principles in Chapters I, II, and III, providing additional guidance on the accurate delineation of intra-group services, the benefit test, the determination of the arm’s length charge, documentation, and low value-adding intra-group services, and adding 21 examples. The OECD states that the proposed revisions are not intended to change the general principles underlying the transfer pricing analysis of intra-group services.

Key points

Alignment with Chapters I, II, and III

The OECD discussion draft proposes to update and modernize Chapter VII of the OECD Transfer Pricing Guidelines and align its guidance on intra-group services with the foundational principles contained in Chapters I, II, and III. The proposed revisions also seek to enhance clarity and provide practical illustrations through additional examples. The OECD states that the revisions are not intended to change the general principles underlying the transfer pricing analysis of intra-group services.

Accurate Delineation of Intra-Group Services

The proposed revisions provide that the first step in the transfer pricing analysis is to identify the commercial and financial relations between associated enterprises and the conditions and economically relevant circumstances attached to those relations in order to accurately delineate the intra-group service transaction.

The discussion draft further states that labels or descriptions assigned to intra-group services, including a description of a payment as a service fee or the existence of written contracts, do not by themselves establish that services have been rendered. The accurate delineation is to consider the relevant facts and circumstances, including the functions performed, assets used or contributed, risks assumed, and interdependencies with other controlled transactions and activities within the MNE group.

Benefit Test

The proposed revisions include specific guidance on the benefit test. The assessment considers whether an activity performed by one group member provides another group member with economic or commercial value that enhances or maintains its business position.

The discussion draft states that this is determined by considering whether an independent enterprise in comparable circumstances would have been willing to pay for the activity if performed by another independent enterprise or would have performed the activity in-house. The draft also states that the benefit test and the determination of the arm’s length remuneration are separate analyses and should not be conflated.

The proposed guidance also addresses shareholder activities, duplicative activities, incidental benefits, and activities performed for one or several members of an MNE group as specific situations relevant to the application of the benefit test.

One-Sided Transfer Pricing Methods

The discussion draft states that there should not be a presumption that an intra-group service transaction can be reliably priced using a one-sided transfer pricing method based on its economically relevant characteristics.

It further states that, where a one-sided method is applicable, there should not be a presumption that either the service provider or the service recipient is the tested party. These determinations are to be made following the accurate delineation of the controlled transaction and consideration of its economically relevant characteristics.

Arm’s Length Charge and Transfer Pricing Methods

The proposed revisions include guidance on determining the arm’s length charge and other conditions for intra-group services. Section C of the discussion draft addresses direct-charge and indirect-charge approaches and the application of transfer pricing methods to transactions involving intra-group services.

The discussion draft provides that the determination of the arm’s length remuneration is separate from the assessment of whether an activity constitutes an intra-group service under the benefit test. The arm’s length remuneration is addressed by applying the guidance in Chapters II and III together with the proposed guidance in Section C of Chapter VII.

Documentation

The proposed revisions include a separate section on documentation intended to supplement the guidance in Chapter V of the OECD Transfer Pricing Guidelines.

The discussion draft states that MNE groups should provide tax administrations with information necessary to substantiate their positions concerning intra-group services. It also states that additional information requests should be reasonable in light of the materiality of the transaction and the compliance burden.

Low Value-Adding Intra-Group Services

The proposed revisions retain the existing approach to low value-adding intra-group services. The OECD states that the relevant section reproduces the existing approach in the OECD Transfer Pricing Guidelines, with adaptations limited to updates of cross-references where necessary.

The discussion draft separately addresses the definition of low value-adding intra-group services, the simplified determination of arm’s length charges, documentation and reporting, and withholding tax on charges for low value-adding intra-group services.

Twenty-One Examples

The proposed revisions include an Annex I containing 21 examples on intra-group services. The examples are presented throughout the discussion draft to illustrate the application of the proposed principles to specific intra-group service arrangements.

Public Consultation and Comments

The OECD's public consultation on the proposed revisions ran from June 1 through July 22, 2026. On August 24, 2026, the OECD published the public comments received during the consultation period. The OECD stated that the comments will inform discussions at the forthcoming public consultation meeting in November 2026.

Status of the Discussion Draft

The OECD states that the publication of the discussion draft reflects the views of Working Party No. 6 delegates that the draft was at an appropriate stage for stakeholder input. The draft does not, at this stage, represent the consensus views of the Committee on Fiscal Affairs or its subsidiary bodies that any portion of its content should be adopted in an updated version of Chapter VII.

The OECD further states that the discussion draft is intended to provide substantive proposals for potential revisions and additions to the current version of Chapter VII for analysis and comment.

Public Consultation Meeting

The OECD plans to hold a meeting to discuss the outcomes of the public consultation on November 9, 2026, at the OECD Conference Centre in Paris, France. The OECD states that registration details will be published on its website in September 2026.

Source

OECD, Public consultation on taxation: Revisions to Chapter VII of the OECD Transfer Pricing Guidelines (August 24, 2026)

OECD — Public consultation on taxation: Revisions to Chapter VII of the OECD Transfer Pricing Guidelines

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Disclaimer:

This content is for general informational purposes only and does not constitute professional advice.

Information provided herein is based on publicly available sources as of the publication date and may be subject to change.

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