OECD proposes strengthening the proof of intragroup services: the contract and the invoice may not be enough.

EAS LATAM
1 day ago
4 min read

By MAF. Gabriela Páez

Tax Manager – EAS LATAM

Charges for administrative, accounting, financial, technological, or management services between related companies are quite common in multinational groups. Even so, proving that the service was actually provided and that the charge complies with the arm's length principle can become one of the most sensitive issues during a tax audit.

In June 2026, the Organisation for Economic Co-operation and Development ( OECD ) published a proposed revision of Chapter VII of its Transfer Pricing Guidelines, focusing on intragroup services, for public comment. The consultation period ran from June 1 to July 22; the comments received were published on August 24, and a public meeting is scheduled for November 9, 2026.

Important: This text is still a public consultation document. It is not a current amendment to the Guidelines and does not yet reflect a consensus position of the Committee on Fiscal Affairs. The OECD itself warns that taxpayers and tax administrations should not use this draft as if it were already an approved rule.

Reference document: Safe Harbour 5% Intra-Grup

What does the OECD intend to change?

The project does not aim to change the general principles of transfer pricing. Rather, it seeks to update and clarify how intragroup services should be analyzed: how they are defined, how market value remuneration is determined, and what documentation is needed to support it.

In practice, these are some points that companies should keep in mind:

Issue	Approach proposed by the OECD	Practical implications
Existence of the service	A contract, an invoice, or a description such as "management fee" does not, by itself, prove that the service was actually provided.	Evidence of the activities carried out and their receipt by the beneficiary entity must be kept.
Benefit Test	It must be determined whether the recipient obtained, or reasonably expected to obtain, an economic or commercial benefit.	It is advisable to document why an independent company would have paid for the activity or would have performed it internally.
Shareholder activities	Costs generated exclusively by the status of shareholder do not constitute services provided to subsidiaries.	Consolidation for the parent company and certain corporate or partnership costs should not be automatically allocated.
Duplicity	In principle, an activity that simply duplicates a local function or a service contracted to a third party does not generate an additional intragroup service.	It is necessary to identify what value the regional or corporate function actually brings and to document justified exceptions.
Distribution keys	The allocation should reasonably reflect the benefit expected by each recipient.	The same distribution basis should not be used for all services without explaining its relationship to profit.
Documentation	The draft elaborates on the relevance of contemporary evidence regarding the provision, benefit, and determination of the charge.	Emails, minutes, reports, deliverables, contracts, calculations, and timesheets become more important.

The importance of the distribution key

One of the most practical aspects of the document is the selection of allocation keys. The OECD mentions, for example, that personnel-related services could be allocated based on headcount; IT services, based on the number of users; fleet management, based on the number of vehicles; and accounting support, based on the number of relevant transactions or assets. In certain circumstances, revenue can also constitute a reasonable allocation key.

The logic is simple: the base used should be related to the expected profit for each company, not just to the ease of calculation. Furthermore, the same key should be consistently applied to services within the same category and maintained from year to year, unless there is a justifiable reason to change it.

Did the 5% margin change?

No.

This is a particularly important point. The document itself indicates that the section on low value-added intragroup services replicates the existing approach and that its content was only adjusted to update internal references.

Under the simplified approach, qualifying services continue to use a 5% markup on relevant costs , excluding pass-through costs. This percentage does not require a comparables study to justify it under the simplified approach.

However, that 5% cannot be automatically used as a benchmark for any intragroup service. To qualify as a low value-added service, the activity must be supportive, not part of the group's core business, not use or create unique and valuable intangibles, and not involve significant economic risks.

Therefore, activities such as research and development, manufacturing, sales, marketing and distribution, financial transactions, natural resource extraction, insurance and reinsurance, as well as certain senior corporate management functions, are excluded from the simplified approach. The margin applicable to these services requires a separate transfer pricing analysis and could be higher, equal to, or even lower than 5%, depending on the facts and circumstances.

Documenting the benefit will become increasingly important

The project develops evidence that may be useful in supporting the existence and price of an intragroup service. The level of detail should be proportionate to the materiality and nature of the transaction, but the dossier should allow for a clear reconstruction of what was done, who benefited, and how the charge was calculated.

Expected benefit. Explanation of the economic or commercial value that the receiving entity expected to obtain.
Communications and approvals. Emails, minutes, internal decisions, and coordination between supplier and recipient.
Scope and deliverables. Contracts, schedules, presentations, reports, memos, consulting services, or sample IT tickets.
Building the cost base. Identifying direct costs, indirect costs and operating expenses, using invoices, receipts and timesheets.
Allocation and remuneration. Justification of keys, applied calculations, cost reconciliation and separation of pass-through costs.

Practical conclusion: the defense of an intragroup position should begin when the service is provided and not when an audit arrives.

For multinational groups with operations in Costa Rica, the review proposed by the OECD represents a good opportunity to examine their intragroup services policies, especially evidence of benefit, shareholder activities, potential duplications, cost bases, and the keys used to allocate charges.

At EAS LATAM, our Transfer Pricing specialists can assist in the review and documentation of related party transactions in accordance with the OECD Guidelines and applicable regulations in Costa Rica. Contact us