The European Commission's Regulatory Scrutiny Board (RSB) issued a negative opinion on 25 June 2026 on the impact assessment for a proposed Council Directive on transfer pricing rules, blocking the proposal from advancing until the Commission addresses fundamental shortcomings in its analysis. The RSB found the problem definition, baseline scenario, and policy options insufficiently developed, and criticised the lack of robust quantitative data to support the claimed benefits of harmonising transfer pricing rules across EU Member States. The opinion also notes that the assessment does not adequately address the proportionality of the proposed measures for small and medium-sized enterprises (SMEs), which could face disproportionate compliance costs.
The Commission must now resubmit a revised impact assessment that provides stronger evidence and analysis before the directive can proceed to formal adoption by the Council.
This setback delays a key initiative aimed at reducing tax avoidance through transfer pricing manipulation, which costs EU governments billions in lost corporate tax revenue annually.
EU Member States, which would benefit from increased tax revenue but face implementation costs; large multinational enterprises, which would gain from simplified compliance but may face higher effective tax rates; SMEs, which could be disproportionately burdened by new reporting requirements; and tax advisors and legal firms, which may see reduced demand for transfer pricing services if rules are harmonised. The RSB's rejection underscores tensions between the Commission's ambition to curb tax avoidance and the need for evidence-based policymaking that balances regulatory costs against benefits. The Commission has not yet announced a timeline for resubmission, but the directive's progress is now contingent on a satisfactory revised impact assessment.