The Luxembourg Transfer Pricing Association brings together 22 specialists dedicated to addressing the evolving complexities of transfer pricing. President Vanessa Ramos Ferrín hopes the non-profit will serve not only as a point of reference in Luxembourg but also as an example for other jurisdictions.
Transfer pricing is an accounting practice that determines the prices at which goods, services, and intangible assets are exchanged between divisions, subsidiaries, or affiliated companies within the same larger enterprise. This practice is particularly important in Luxembourg due to its prominent role in international finance and corporate structures.
Having 16 years’ experience in transfer pricing, Vanessa Ramos Ferrín has taken note of the issues Luxembourg is facing in this domain. The managing partner of TransFair Pricing Solutions—recently shortlisted for Best Transfer Pricing Firm by International Tax Review—says the main challenges include evolving EU regulations and the rise of TP assessments. Such assessments have also led to more questions, including mechanisms to avoid such disputes, on the international level.
Groundwork
So, in February, she began laying the groundwork for the Luxembourg Transfer Pricing Association, or LTPA, which launched on 11 July. Over those months, Ramos Ferrín met with around 40 individuals involved in TP in Luxembourg, although not all were given the stamp of approval by their companies to join the non-profit. Nevertheless, the 22-strong network brings together professionals from multinational entities, consultancies, law firms, academia and other associations.
“This is the first transfer pricing association in Europe,” explained Ramos Ferrín. “While there is an association in Poland, it primarily consists of multinational entities that united to address various issues related to transfer pricing. Our association aims to bring together a broader range of stakeholders to work collaboratively, serving as the leading voice and central point of reference for the transfer pricing profession in Luxembourg.”
Joining Ramos Ferrín on the executive committee are Pierre-Alexis Recroix as vice-president, Sophie Balliet as secretary, and Patrick Labranche as treasurer.
Linking industry, tax authorities
One of the main objectives of the LTPA is to “develop a comprehensive framework for best practices and address evolving challenges in transfer pricing.” Serving as an advocacy body and communication channel are also key.
“We are committed to encouraging transparent communication and collaboration between the industry and tax authorities to ensure a well-informed, compliant, and cooperative environment for all stakeholders,” Ramos Ferrín said.
An LTPA team has already met with Luxembourg’s finance ministry and the follow-up will focus on the Direct Tax Administration (Administration des contributions directes, or ACD). “We’re on a good way to get approval of having someone from the ministry of finance and from the ACD to be part of the technical discussions,” Ramos Ferrín said.
By early 2025, the LTPA aims to hold networking events so members can connect. White papers and other publications are also in the pipeline.
Novel opportunities for Luxembourg?
Recent cases have put TP practices and analyses under scrutiny—and Luxembourg in the international spotlight.
The EU’s top court sided with Amazon in December 2023, for instance, judging it did not receive unlawful state aid from the Grand Duchy. Loyens & Loeff, which assisted the American multinational on TP and tax aspects in the case, stated at the time, “In line with its landmark Fiat judgment of November 2022, the CJEU considered that the OECD transfer pricing guidelines could not form part of the ‘reference framework’, i.e., normal taxation in Luxembourg against which a selective advantage is tested, because Luxembourg law did not explicitly refer to and implement these guidelines. Thus, the decision of the European Commission was vitiated by a fundamental error.”
As a next step, Ramos Ferrín wants to encourage her cohorts in other jurisdictions to establish similar associations and exchange best TP practices. As she put it, “In the mind of many tax jurisdictions, they have a view that Luxembourg doesn’t do good business—when it’s not actually the case.”
This proactive approach is also echoed in the LTPA’s longer term objective to establish a TP centre with “a reputable academic institution” which would serve as a way to further foster discussions and analysis, as well as “attract top talent to Luxembourg and offer opportunities for professional development.”