Transfer pricing is no longer shaped solely by guidelines and local regulations. Increasingly, court decisions across Europe are redefining how tax authorities interpret and challenge intra-group transactions.
This is exactly why MDDP has prepared a comprehensive review of transfer pricing case law. While the publication originates in Poland, it goes far beyond local specifics, offering a pan-European perspective on the most important judicial trends.
The conclusions are clear: regardless of where your business operates, you are likely facing the same transfer pricing risks and challenges.
Below we present sample judgments and their conclusions that create trends in transfer pricing. The entire study can be found at the link at the end of the article.
Cost Base Under Scrutiny: A Growing Audit Focus
One of the key themes emerging from recent case law is the increasing scrutiny of the cost base in transfer pricing. The case law therefore confirms that not only the level of the mark-up or the allocation keys is critical, but also the scope of costs included in the cost base and their functional linkage to the relevant controlled transaction. Therefore, before determining remuneration, it is advisable to carefully consider which costs should be included in the cost base, how they should be allocated, and whether all of them should be subject to a mark-up.
This trend significantly raises the bar for taxpayers applying cost-based methods.
Comparability, Losses and the “Actual” Nature of Transactions- common transfer pricing errors
Transfer pricing acts as a link between business and taxation by determining the arm’s length value of transactions that directly affect profits, leaving little room for discretion in applying transfer pricing rules.
In practice both taxpayers when setting transfer prices, and tax authorities, when assessing arm’s length conditions, often make errors. The international courts in 2025 rulings found that tax authorities’ transfer pricing analyses were flawed due to improper selection of comparables and methodologies, including incorrect geographic benchmarks, mismatched functional profiles, and assessing profitability at the entity level instead of the specific transaction.
These cases illustrate that transfer pricing analyses must go beyond technical compliance and address the actual business rationale.
Financial Transactions Under Pressure
The Luxembourg case addresses arm’s length nature of intra-group financial transactions conditions. The tax authority challenged the modification of financing terms and the waiver of interest.
The implications are significant: in case the taxpayer changes the conditions of financial transaction, tax authorities may expect a new benchmarking analysis or strong business justification.
Why This Matters for Your Business
For multinational groups, this means:
- TP policies must reflect actual operations,
- documentation must be robust and consistent,
- and positions must be defensible across multiple countries.
Explore More: TP Case Law Review 2025
If you want to better understand how these trends may impact your business, we invite you to explore MDDP Poland latest publication: TP case law review 2025.
This report provides a comprehensive analysis of key Polish and international judgments, highlighting practical implications and risk areas for taxpayers.
