The guidelines cover risk management in dealing with transfer pricing, the application of secondary adjustments and the use of compensating adjustments.

The EC says the guidance is based on the general principles of cooperation between taxpayers and tax administrations and identification of high and low risk areas. Best practices are identified for the pre-audit, audit and dispute resolution phases of examining a transfer pricing file.

On secondary adjustments, the JTPF recommends that where such adjustments are not compulsory, they should not be imposed in order to avoid double taxation. Where secondary adjustments are compulsory, there should be provision to relieve double taxation.

There is also practical guidance on avoiding double taxation and double non-taxation in the application of compensating adjustments in spite of the different practices of member states. In particular, it recommends that member states should accept a compensating adjustment initiated by the taxpayer for the purpose of filing the tax return, if the taxpayer has fulfilled a set of conditions.

The EC says the guidelines are relevant in the context of the ongoing Organisation for Economic Cooperation and Development (OECD) work on the Base Erosion and Profit Shifting project (BEPS).

The EU has also provided an update on the implementation of the EU JTPF work programme, which runs until March 2015.

The Communication is available at http://ec.europa.eu/taxation_customs/resources/documents/taxation/company_tax/transfer_pricing/forum/com(2014)315_en.pdf