The OECD Revises Rules on Intra-Group Services: What’s Changing and Why It Matters

Analysis of the Discussion Paper on the Revision of Chapter VII of the Transfer Pricing Guidelines – June 2026

Background: Why this review is relevant

On June 1, 2026, the OECD published a Discussion Paper containing proposals to revise Chapter VII of the Transfer Pricing Guidelines, which deals with intra-group services. The public consultation period remains open until July 22, 2026, and an in-person consultation is scheduled to take place in Paris in November 2026.

Although the OECD emphasizes that the revisions are not intended to alter the general principles, the fact is that the document introduces substantial changes in how services between related companies are analyzed, documented, and valued. For any multinational group with shared service centers, centralized corporate functions, or management fees, the practical implications are significant.

Key Points of the New Chapter VII

01

Alignment with Chapters I through III: precise delineation as a starting point

The most significant structural change is the incorporation of the concept of “accurate delineation” from Chapter I as the first mandatory step in the analysis of intra-group services. This means that it is no longer sufficient to simply verify whether an activity generates a profit; instead, one must first identify the true nature of the transaction, the functions of each party, the assets used, and the risks assumed.

02

A more nuanced and flexible benefit test

The profit test has been significantly refined. The new text clarifies several points that, in practice, had led to disputes between tax authorities and taxpayers:

Expected benefit vs. actual benefit. A service is considered to have been rendered if, at the time it was provided, the recipient could reasonably expect a benefit, even if that benefit does not materialize. The OECD illustrates this with an example of an ERP system whose implementation is delayed due to the departure of key personnel: the delay does not negate the existence of the service.

Distinction between the benefit test and the arm’s length price. The document explicitly separates these two analyses. The fact that a service passes the benefit test does not imply that its price is correct, and the fact that the price is not at arm’s length does not imply that the service does not exist. These are independent assessments.

Multi-year assessment. When the expected benefit does not materialize, reviewing data from several fiscal years can be useful in assessing whether the expectation was reasonable at the outset, and whether independent parties would have continued to pay for the service.

03

Shareholder activities: greater clarity, but also more gray areas

The draft introduces a clearer distinction between “shareholder activities” (which should not be charged to subsidiaries) and “stewardship activities” (which may include fee-based services). Shareholder activities include, among other things, investor relations, financial consolidation, and the parent company’s tax compliance.

However, the OECD acknowledges that a shareholder may simultaneously engage in activities that benefit both itself and its subsidiaries. In such cases, the key is to properly allocate costs and not to charge the portion corresponding to the shareholder’s own benefit to the subsidiaries. This will require a more granular analysis of the functions of corporate headquarters.

04

Duplication and incidental benefits: a case-by-case approach

Duplication of services is no longer assessed mechanically. The draft requires a case-by-case analysis of the nature, scope, customization, and duration of each activity. It allows for exceptions such as temporary duplication during reorganizations, obtaining a second legal opinion, or regulatory requirements that mandate simultaneous local and consolidated functions.

With regard to incidental benefits, the principle remains that they do not give rise to a payment obligation when they are indirect or remote. The document also distinguishes between incidental benefits arising from a specific activity and those arising from mere membership in the group (passive association), where the benefit test is not even triggered because there is no deliberate activity.

05

Valuation methods: it's not all cost-plus

The OECD stresses that it should not be assumed that cost-based methods are always preferable for intra-group services. The appropriate method depends on the economically relevant characteristics of each service. This means that multinational groups will have to provide a more rigorous justification for their choice of method.

It also includes a detailed guide on pass-through costs (costs passed on without a markup) and on when it is appropriate to apply a markup to the intermediary’s costs as opposed to the costs of the underlying service. It further clarifies that the profit-split method may be applicable when both parties make unique and valuable contributions, operate in a highly integrated manner, or assume economically significant risks.

06

Documentation: Proportionality and Contemporary Evidence

The documentation section is supplemented with specific practical recommendations for intra-group services, which complement Chapter V. The OECD introduces a principle of proportionality: the level of documentation must be consistent with the materiality and nature of the services.

It is recommended to maintain contemporaneous evidence demonstrating compliance with the benefit test: communications between the provider and the recipient, technical documentation or service agreements, tangible deliverables (reports, memos, support tickets), and a clear breakdown of activities. If the expected benefit does not materialize, an explanation of the reasons and the business decisions made is required.

07

Low-value-added services: no substantial changes

The section on low-value-added services is reproduced essentially unchanged. The simplified approach (cost pool plus a 5% mark-up) remains intact. The only changes are updates to cross-references to the new text. This suggests that the OECD considers this system to be well-established and functional.

08

Twenty-one illustrative examples

One of the most valuable contributions of the draft is the inclusion of 21 practical examples in a new Annex I. The examples cover scenarios such as cyberattacks that do not disrupt service availability, marketing strategies that fail to meet projected targets, shareholder activities versus services to subsidiaries, apparent duplication of marketing services, benefits of passive association, application of the CUP to IT services, use of profit split in pharmaceutical R&D services, and pass-through costs in advertising intermediation. These examples will serve as an essential reference tool in the day-to-day practice of transfer pricing.

Practical implications for business groups

Although this is a draft open for comment, the direction we are heading is clear. Multinational groups should consider the following medium-term actions:

Next steps

The consultation period ends on July 22, 2026. The OECD is expected to hold an in-person public consultation in November 2026 in Paris and to publish revised versions of the draft in light of the comments received. At PKF Attest closely PKF Attest the progress of this process and its implications for our clients.

Note: This article is based on the Discussion Paper published by the OECD on June 1, 2026 (“Revisions to Chapter VII of the OECD Transfer Pricing Guidelines — Special considerations for intra-group services”). The draft does not represent the final position of the Committee on Fiscal Affairs and should not be used as a basis for decision-making without professional advice.